What Does Liquidity Mean When Trading?

What Does Liquidity Mean When Trading?
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    What is Liquidity?
    Liquidity as a term is defined as the ability to buy or sell assets in the market without
    causing a drastic change in the assets price.
    Liquidity can refer to two different areas; liquid market and liquid asset.
    Liquid market means that there are always investors in the market willing to trade.
    A liquid asset refers to an asset that can be easily converted into cash.
    But what does this mean when talking about cryptocurrencies?
    As with any investment, you want to be able to sell and buy tokens quickly without a need
    to cut the price or wait for too long for the trade to be matched.
    In order for this to be possible, the market you're trading in must be liquid.
    In other words, there must be high trading activity and the bid and ask prices must not
    be spread too far apart.
    Let's take an example from a seller's point of view;
    Bob has 5 tokens of a certain cryptocurrency and the price for his tokens has increased
    in the past few days.
    Bob is happy and decides to quickly sell all his tokens for the current market price.
    If the market is liquid, meaning that there are enough buyers that are willing to buy
    Bob's tokens for the price he is asking, Bob is able to sell his assets quickly and
    sell at the price he wants.
    Bob's trade does not affect the token price since there is sufficient liquidity to accommodate
    for Bob's trade.
    However, if Bob is asking to sell his 5 tokens at the current market price and the market
    is illiquid or has low liquidity, meaning that there are not enough buyers willing to
    pay the price Bob is asking, he is required to lower his asking price or wait for the
    market to become more liquid to be able to sell his tokens.
    If Bob decides to sell at a lower price, his trade is also affecting the current market
    price of the token.
    How to tell if a market is liquid When looking to see if a market is liquid
    or illiquid, it's good practice to look at three important indicators.
    24 hour trading volume, Order book depth and the amount by which the ask price exceeds
    the bid price, also known as the bid/ask spread.
    However, the order book might not always be an accurate representation due to factors
    like stop-limit orders and iceberg orders, which are created with using trade automation
    and as a result don't always appear on an order book until specific conditions are met
    for those orders.
    Liquidity is extremely important when considering your trades.
    It is one key factor for easily entering or exiting the market.
    Stay tuned for more content and remember to watch our other videos at Binance Academy.
    China is now the biggest trading partner of the Philippines, with the amount reaching $44.8 billion as of 2017 alone. https://youtu.be/g4kSxhnS6eI @NAJMET SHEFA FOOD STUFF TRADING L.L.C Today's chuck wagon racing in Rolling River with Terrell Amyotte Ty Clearsky Leo J Amyotte there getting in shape for Calgary stamped next year lol 👍 Playing WARFRAME on Steam! Leave a like and share with your friends. :) _______________________________ StreamLabs: https://streamlabs.com/nial _______________________________ Facebook: https://facebook.com/OfficialDeNiaL.tv Twitter: https://twitter.com/NialDeNiaL Twitch: https://twitch.tv/OfficialDeNiaL _______________________________ WARFRAME TRADING & INFO ( MALAYSIA ) https://www.facebook.com/groups/181915025322428/ WARFRAME SEA Tenno https://www.facebook.com/groups/warframeSEA _______________________________ #warframe #ninjaplayfree #facebookgaming Range 131 - Looking forward to play airsoft in this awesome field. The fun is not in the game but what happens before and after game. The moments when you sit down with your teammates and also meet new friends over food and coffee trading stories. As always our tent is welcome to anyone who would like to have some Filipino food and hospitality. This is the the best part of playing airsoft more than the just the game. Going home and counting how many new friends you meet. So Nov. 2 let the fun begin. Hope to see our friends and meet new friends. Godspeed to all. Looking to invest? Here are the top trading ideas for today A big final fuck you to the white sox season as Chris Sale closes out the World Series with a strikeout. Probably not a good idea trading one of the best pitchers in baseball. She sees that her trading is profitable, and her lamp does not go out at nighT. Blessed are you among women.... Blessed life and years to this woman who is one of the person behind my succes! Christmas in October why not?! Here's a sneak peak of what's coming for the holidays this year! Go like Shop Southern Charm Trading Co so you don't miss out! 🎄🎅🏼🤶🏻 Ps I WANT IT ALL! So many cute options!
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