Liquidity is an important aspect of stock investing that is often overlooked by novice investors. It refers to the ease with which an asset can be bought or sold in the market without causing significant price movements. Liquidity is significant in the context of stock investing because it has an impact on the price at which a stock may be purchased or sold. Low-liquidity stocks may have bigger bid-ask spreads and higher transaction costs, whereas highly liquid stocks can readily be acquired or sold at market price. This may have an impact on an investment's profitability, especially if the investor wants to swiftly sell their holdings. So, before making an investment in a stock, it's crucial to take its liquidity into consideration.
The importance of liquidity in stock investing
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