#Liquidity101 *Liquidity 101*

*What is Liquidity?*

- Ability to buy or sell assets quickly and at a stable price

- Measure of market activity and trading volume

*Types of Liquidity:*

- *High Liquidity*: Assets can be easily bought or sold without large price movements (e.g., major currencies, large-cap stocks)

- *Low Liquidity*: Assets are difficult to buy or sell without large price movements (e.g., small-cap stocks, exotic currencies)

*Importance of Liquidity:*

- Reduces trading costs

- Increases market efficiency

- Provides flexibility for traders and investors

Understanding liquidity is crucial for navigating markets effectively.