#Liquidity101
Liquidity$BTC
- Ability to buy or sell assets quickly and at a stable price
- Measure of market activity and trading volume
*Types of Liquidity:*
- *High Liquidity*: Assets can be easily bought or sold without large price movements (e.g., major currencies, large-cap stocks)
- *Low Liquidity*: Assets are difficult to buy or sell without large price movements (e.g., small-cap stocks, exotic currencies)
*Importance of Liquidity:*
- Reduces trading costs
- Increases market efficiency$ETH
- Provides flexibility for traders and investors
Understanding liquidity is crucial for navigating markets effectively.
