🔍 Liquidity
I thought for a long time that I understood liquidity.
Well, like: 'the more volume — the better, it’s all logical'.
But over time it became clear: liquidity is not just about volume, but about price behavior, market depth, and even the interest of market makers.
If you want to trade seriously — understand liquidity not in words, but in numbers and structures.
🧠 1. Volume ≠ liquidity
You see $500M in volume on the pair — and think everything is OK. But:
• 90% of that volume can be concentrated within 1% of the price
• or even 'wash trading' from the exchange
📌 Liquidity is about how much you can actually buy/sell without moving the price.
📊 2. Order Book Depth = the real X-ray of the market
I now always look at:
• what the depth of the book is at 1%, 2%, 5%
• how quickly the order book updates
• are there gaps in the order book (liquidity voids)
🧠 If in a pair with $500k a position needs to be layered in several times — that’s already a risk of slippage.
🛡️ 3. Liquidity = your protection in a volatile market
High liquidity is your exit from a position without panic.
Poor liquidity is when you lose % just for hitting 'sell'.
Especially critical:
• on futures with high leverage
• in low-cap tokens
• during news/dumps
