#Liquidity101 #Liquidity101

Liquidity refers to how easily an asset can be bought or sold without affecting its price. Highly liquid assets like Bitcoin or major stocks can be traded quickly with minimal price changes, while low-liquidity assets may take longer to sell and have bigger price swings. Liquidity is crucial for traders—it ensures smoother order execution, tighter spreads, and lower slippage. Markets with high liquidity are generally more stable and efficient. Always consider liquidity when choosing what to trade and when to enter or exit a position. In short: more liquidity = better flexibility and lower trading risk.