🔥WHAT IS LIQUIDITY? (LEVERAGE TRADIN)🔥
DEFINITION:
DEFINITION:
Liquidity, in the context of trading, refers to the ability to buy or sell an asset quickly and at a stable price. It measures the market's ability to absorb a trade without significantly affecting the asset's price ¹ ² ³ ⁴. Here are some key points to consider:
👉 High liquidity means that there are many buyers and sellers actively trading the asset
👉 Trades can be executed quickly and at a fair price in high liquidity markets
👉 The spread between the bid and ask prices is narrow in high liquidity markets
👉 Low liquidity, on the other hand, indicates fewer market participants are trading the asset
👉 In low liquidity markets, trades may take longer to execute and at a less favorable price
👉 The bid-ask spread is wider in low liquidity markets
👉 Liquidity affects the ease of entering and exiting trades
👉 It influences the price volatility of the asset
👉 It impacts the overall trading costs.