Having liquidity is understood in a basic sense in trading as having money available to trade, but many people believe that the importance of liquidity when trading the markets is limited to that.
Liquidity is not just about money to trade
Having liquidity is a very broad concept, it refers not only to having money to operate in the markets, but also to having enough money for our daily personal use, and having money available for possible investments or sudden future transactions that may or may not arise. . in the future.
Why should we have liquidity when trading?
The importance of liquidity when we trade is obvious, because if we have enough liquidity when we open a trade, we will not be excessively nervous about not losing money.
So, having liquidity gives us the peace of mind of being able to operate in the markets, it gives us the necessary patience to operate wisely, waiting for our perfect opportunity to enter and exit operations, without making appreciation errors so as not to lose money.
Of course, no one wants to lose money in any way, but what I mean by this is that if you are too concerned about the possibility of losing money, you can make wrong decisions in the market and the opportunities to make money can slip away from you.
Three useful tips for trading the markets
In this regard, the three most useful tips that I have seen over the years regarding the subject of trading are:
1. Do not trade out of nervousness, euphoria or obligation: Trade only when you are calm, in a state of normal sensation.
2. Have sufficient liquidity, or always have enough money available both to operate and for our personal expenses:
This will make you wiser and calmer in your operations.
3. Never risk money in markets that you cannot afford to lose:
The markets are unpredictable, so you should follow this recommendation to avoid personal problems in the future. Obviously you will put all your efforts and knowledge not to lose money anyway, but this prevention is just in case.
To end this post today:
Liquidity is very important, there is nothing to replace it, and it is one of the things that gives more peace of mind to traders when carrying out their operations in the markets.
Then, I will not tire of saying it, if you have enough liquidity, you can achieve great things in the markets, but if you do not have liquidity, you will have it much more difficult.
Please, comment your opinions on the subject discussed. See you!
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