#Liquidity101 🔍 Liquidity

I used to think that I understood liquidity.

You know, like: "the bigger the volume — the better, it’s all logical".

But over time it became clear: liquidity is not just about volume, but about price behavior, order book depth, and even the interest of market makers.

If you want to trade seriously — understand liquidity not just in words, but in numbers and structures.

🧠 1. Volume ≠ liquidity

You see $500M volume on a pair — and you think everything is OK. But:

• 90% of that volume might be concentrated within 1% of the price

• or it could be “wash trading” on the part of the exchange

📌 Liquidity is about how much you can actually buy/sell without moving the price.

📊 2. Order Book Depth = the true X-ray of the market

Now I always look at:

• what the depth of the order book is at 1%, 2%, 5%

• how quickly the order book updates

• are there any gaps in the order book (liquidity voids)