#Liquidity101

Liquidity refers to the ability to buy or sell an asset quickly and at a stable price. *High Liquidity*: Assets can be easily bought or sold without significantly affecting the market price. *Low Liquidity*: Assets may be difficult to buy or sell, leading to larger price movements. Liquidity is crucial for traders, as it affects the ease of entering and exiting positions. High liquidity typically results in tighter bid-ask spreads and lower transaction costs. Market makers and traders closely monitor liquidity to optimize their trading strategies and minimize risks. Understanding liquidity helps traders navigate markets more effectively and make informed decisions.