In cryptocurrency trading, liquidity refers to the ability of an asset to be bought and sold quickly at a reasonable price without significantly impacting the market price. High liquidity means active buy and sell orders, allowing for quick transaction execution; low liquidity can lead to slippage, where the actual transaction price deviates from expectations, and even result in failed trades, especially during periods of high market volatility when risks are exacerbated.

To assess liquidity, one can review the depth chart of trading pairs, observing the number of buy and sell orders and their price distribution; a large number of orders with a small price spread indicates good liquidity. Trading volume can also serve as a reference, as high trading volume often corresponds to high liquidity.

To reduce slippage, one can adopt these strategies: avoid trading during periods of high market volatility; choose trading pairs and platforms with good liquidity; split large orders into smaller ones to minimize market impact; use limit orders to precisely control the transaction price instead of blindly chasing orders with market orders, thus ensuring controllable trading costs and smoother execution.