#Liquidity101 What is liquidity in trading and why is it important?

Liquidity in trading refers to how easy it is to buy or sell an asset without significantly changing its price. When a market is liquid, there are many people buying and selling, making it easy to enter or exit a trade without large fluctuations in the asset's value.

For example, in the Forex market (foreign exchange), some pairs like EUR/USD have high liquidity. This allows you to trade quickly and at fair prices. On the other hand, when an asset has low liquidity, it can be difficult to sell or buy it at the price you want, and that can lead to losses.