#Liquidity101 #Liquidity101

Liquidity refers to how easily an asset can be bought or sold without significantly affecting its price. In highly liquid markets—like major cryptocurrencies or stocks—trades execute quickly with minimal price slippage. Low liquidity means fewer buyers and sellers, leading to larger price swings and potential difficulty exiting positions. High liquidity is crucial for efficient trading, tighter spreads, and reduced risk. Factors influencing liquidity include trading volume, market depth, and the number of active participants. Whether you’re trading on a CEX or DEX, understanding liquidity helps you avoid costly mistakes and ensures smoother, more predictable trade execution.