#Liquidity101
"Liquidity 101: The Lifeblood of Markets
Liquidity refers to how easily an asset can be bought or sold without significantly affecting its price. High liquidity means:
1. *Tighter bid-ask spreads*: Less difference between buy and sell prices.
2. *Faster execution*: Trades are filled quickly and efficiently.
3. *Less price volatility*: Prices are more stable.
Low liquidity, on the other hand, can lead to:
1. *Wider spreads*: Higher trading costs.
2. *Slippage*: Trades are executed at unfavorable prices.
3. *Increased volatility*: Prices can fluctuate wildly.
