#Liquidity101 Liquidity plays an absolutely fundamental role in the smoothness and success of trading operations. It is not just an important factor; in many ways, it is the soul of an efficient market. Liquidity is a critical factor for the efficient execution of trades and for mitigating the risk of slippage. A market with high liquidity is more predictable and fair. Successful traders not only seek profit opportunities but also prioritize trading in markets with sufficient liquidity and actively manage the risks associated with low liquidity.

In low liquidity, there are few buyers and sellers. There may not be enough interest in an asset to absorb large or even medium orders without moving the price.