#Liquidity101 Liquidity refers to how easily an asset can be bought or sold without affecting its price. In trading, high liquidity means many buyers and sellers are available, leading to smoother and faster transactions. Assets with low liquidity may have large price swings and slow trades. Liquidity is vital for stable markets and fair pricing. Centralized exchanges usually offer higher liquidity than decentralized ones due to higher volume. Liquidity pools in DEXs are also important, allowing users to trade directly from smart contracts. Traders should always check liquidity before entering a trade to avoid slippage and unexpected losses. In short, liquidity equals market health.