Liquidity
BeginnerB-008
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Join →Liquidity describes how easily an asset can be bought or sold without causing a substantial price change. Highly liquid markets generally have many active participants and substantial trading volume, while less liquid markets can react more sharply to individual orders. Liquidity matters because execution quality, spread, slippage, position size, and risk are all connected to it. As our trading size increases, understanding liquidity becomes increasingly important.
Key Terms
- Liquidity — the core concept introduced in this lesson.