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Liquidity
Ease of transacting quickly at low cost
Definition
Liquidity measures how easily an asset can be bought/sold without affecting price. High liquidity means tight bid-ask spreads and large trading volumes. Illiquid assets suffer from high transaction costs and price impact.
Related Topics
#market efficiency
#transaction costs
#bid-ask spread
#trading volume
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Category: Trading
Trading concepts cover market mechanics, order types, liquidity, and execution strategies.
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