#Liquidity101 💧 Liquidity 101 – The Lifeblood of Trading

🧾 1. What Is Liquidity?

Liquidity = How easily an asset can be bought or sold without big price changes.

High liquidity = fast, stable trades.

Low liquidity = slippage, price spikes, slow fills.

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🔄 2. Why Liquidity Matters

Tighter spreads (small gap between buy/sell prices)

Faster execution

Less price manipulation

Better risk management for large trades

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📊 3. How to Measure Liquidity

Trading volume: Higher = more liquidity

Order book depth: More buy/sell orders = healthier market

Slippage: Difference between expected and actual price

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🔗 4. Liquidity Pools (DeFi)

In DEXs, users provide token pairs to liquidity pools (e.g., ETH/USDT on Uniswap).

Earn fees or rewards in return.

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⚠️ 5. Low Liquidity Risks

Big price swings

Failed or delayed trades

Easier for whales to manipulate price