#Liquidity101

Why Liquidity Matters in Crypto Trading

Liquidity plays a crucial role in successful trading, particularly in volatile markets. Take the WCTUSDT trade, for example — currently down by -34%. A key factor behind this sharp decline? Low liquidity.

When a market lacks liquidity, there aren't enough active buyers and sellers. As a result, even modest trades can move the price significantly, leading to slippage — the difference between the expected price and the executed price. This makes it difficult to enter or exit positions at favorable rates, especially with larger orders.

As a disciplined investor, always review the trading volume and order book depth before committing capital. These indicators reveal market activity and help gauge how easily you can trade without impacting price. Avoid thin markets where price manipulation and losses are more likely. In crypto, risk management begins with market selection. Trade where liquidity is healthy — your portfolio will thank you.