#Liquidity101 #Liquidity101

๐Ÿ’ง What is liquidity? And why does it matter to you as an investor?

Liquidity refers to how easily an asset can be converted to cash without significantly affecting its price. The higher the liquidity, the faster and cheaper you can enter and exit trades.

๐Ÿ“ˆ Example:

โ€“ A stock of a large company like Apple = high liquidity

โ€“ A rare piece of art = low liquidity

In the world of crypto, projects with low liquidity can be riskier due to price volatility and difficulty in selling.

๐Ÿง  Learning to understand liquidity = a first step in reducing risk and increasing efficiency in your trades.