#Liquidity101

Liquidity refers to the ability to buy or sell an asset quickly and at a stable price. It is a measure of how easily an asset can be converted into cash without significantly affecting its market price. High liquidity means there are many buyers and sellers, resulting in tighter bid-ask spreads and less price volatility. Low liquidity, on the other hand, can lead to larger price swings and higher trading costs. In financial markets, liquidity is crucial for efficient trading and risk management. It can be influenced by factors such as market size, trading volume, and the presence of market makers.