Liquidity & Bid/Ask Spread

Liquidity means how easily you can enter or exit a trade. Understanding liquidity is essential for getting good fills and managing risk.

What Liquidity Means

Liquidity means how easily you can enter or exit a trade.

Check These for Liquidity

  • Tight bid/ask spreads
  • High open interest
  • High volume
  • Lots of expirations/strikes available

Bad Liquidity Means

  • Harder fills
  • Worse pricing
  • More slippage
  • Higher risk

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