In finance, liquidity measures how quickly and easily you can turn an asset into cash without significantly affecting its price.
Liquidity = how easily you can buy or sell an asset without affecting its price.
Think of it like this:
🔹️High liquidity = big swimming pool
You can jump in without moving the water much.
🔹️ Low liquidity = small cup
Drop something in… and it overflows.
📊 Why Liquidity Moves Price
Price moves because of imbalance between buyers and sellers.
If there are more buyers than sellers → price goes up.
If there are more sellers than buyers → price goes down.
But here’s the key:
👉 In low liquidity, even small orders can move the market a lot.
👉 In high liquidity, it takes big money to move price.
That’s why during:
🔸️News events
🔸️Low volume sessions
🔸️New token listings . You see crazy volatility.
🧠 Smart Money Secret
Big traders don’t just chase price.
They look for liquidity zones areas where stop losses and orders are stacked.
Because liquidity = opportunity. Price doesn’t move randomly. It moves toward liquidity.
#Liquidity #TradingEducation #CryptoTrading #MarketStructure
