#Liquidity101 Liquidity refers to how easily an asset can be bought or sold without significantly affecting its price. High liquidity means tight bid-ask spreads and better price execution. Low liquidity can lead to slippage, where your order fills at a worse price than expected, especially for large trades.

Before entering a position, I evaluate liquidity by checking:

24h trading volume

Order book depth

Bid-ask spread

Tight spreads and deep order books usually signal good liquidity.

To reduce slippage:

I use limit orders instead of market orders.

I split large trades into smaller ones.

I avoid trading during low-volume times or around high-impact news.

On DEXs, I check price impact and liquidity pool size before swapping.

Overall, trading in high-liquidity markets helps ensure better, more predictable execution—especially important for active or leveraged strategies.