#Liquidity101
๐ง #Liquidity101: What It Really Means & Why It Matters
In the world of finance and investing, liquidity is everything. But what is it, really?
๐ Liquidity = How easily and quickly you can buy or sell an asset without significantly impacting its price.
๐ธ High Liquidity:
โ๏ธ Tight bid-ask spreads
โ๏ธ Lots of buyers & sellers
โ๏ธ Fast execution at fair prices
โ๏ธ Examples: Major stocks, forex, BTC
๐ซ Low Liquidity:
โ ๏ธ Wider spreads
โ ๏ธ Price slippage
โ ๏ธ Harder to exit trades
โ ๏ธ Examples: Penny stocks, niche NFTs, low-cap tokens
๐ Why It Matters:
A liquid market is a healthy market.
Illiquid assets can trap your capital.
Traders need liquidity for smart entries & exits.
๐ Tip: Always consider liquidity before entering a position โ even the best setup can fail if you canโt get in or out efficiently.
Whatโs the most illiquid asset youโve traded? ๐