🔥Understanding Liquidity in Trading💥
Liquidity refers to how quickly and easily an asset can be bought or sold in the market without affecting its price. Assets like major cryptocurrencies (e.g., Bitcoin) or large company stocks usually have high liquidity, meaning you can trade them quickly at stable prices. On the other hand, low-liquidity assets may take longer to sell and may require you to accept a lower price. High liquidity is important for traders because it means faster transactions, smaller price gaps, and lower risk. In simple terms, liquidity keeps the market flowing smoothly and helps traders enter or exit positions with ease.