Liquidity 101

*What is Liquidity?*

In trading, liquidity refers to how easily you can buy or sell an asset without significantly affecting its price. High liquidity means:

- *Tighter bid-ask spreads*: Prices are more stable

- *Faster execution*: Trades are executed quickly

- *Less slippage*: Prices remain stable during trades

*Why is Liquidity Important?*

- *Reduces trading costs*: Less slippage and tighter spreads

- *Increases market efficiency*: Prices reflect true market value

- *Provides trading opportunities*: More buyers and sellers mean more opportunities

*Types of Liquidity*

- *Market liquidity*: Availability of buyers and sellers

- *Funding liquidity*: Ability to meet financial obligations

*Stay informed* about liquidity in your markets to make better trading decisions!#Liquidity101