#Liquidity101
Why Liquidity Matters in Crypto Trading ๐๐
Ever wondered why some trades execute instantly, while others slip or fail? The answer lies in liquidity.
๐น What is Liquidity?
Liquidity refers to how easily an asset can be bought or sold without causing major price changes. High liquidity = faster, smoother trades.
๐ธ Why It Matters:
โ๏ธ Tighter spreads โ The difference between buy and sell prices is small
โ๏ธ Better execution โ Orders fill at expected prices
โ๏ธ Lower slippage โ Less deviation between your order price and actual fill
โ๏ธ Market stability โ High liquidity reduces extreme price swings
๐ Low liquidity can lead to:
โ Delayed trades
โ Higher volatility
โ Poor fill prices โ especially for large orders
๐ Where to find high liquidity?
Centralized exchanges (CEXs) often have deeper order books, while newer tokens on DEXs might have less liquidity.
๐ก Tip: Always check trading volume and order book depth before entering a position!
