#Liquidity101

Liquidity 101 explains how easily an asset can be bought or sold without affecting its price. In trading, high liquidity means there are many buyers and sellers, allowing for fast, smooth transactions with minimal slippage. Low liquidity can lead to price volatility and difficulty entering or exiting trades. Major forex pairs like EUR/USD are highly liquid, while exotic pairs or small-cap crypto currencies may lack liquidity. Exchanges with higher volume generally offer better liquidity. Traders monitor liquidity to manage risk and ensure efficient execution. Understanding liquidity is essential for strategy, especially during volatile markets or when using large position sizes.

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