#TradingPairs101 What Is Liquidity?

Liquidity measures how easily you can buy or sell an asset without moving its price too much.

• High liquidity = tight spreads, deep order books → minimal slippage.

• Low liquidity = wide spreads, shallow depth → big price impact on your fills.

🧐 Evaluating Liquidity Before You Trade

1. Order Book Depth: Scan bids and asks around your target price. More depth = better fills.

2. 24‑Hour Volume: Higher volume pairs absorb large orders with ease.

3. Bid‑Ask Spread: Narrow spreads signal active markets; wider spreads warn of thin trading.

4. Time of Day/Session: Major market hours (e.g., London/New York overlap) often see peak crypto activity.

⚙️ Slippage‑Reduction Strategies

• Limit Orders: Don’t chase the market—let your price come to you.

• Smaller Slices: Break large orders into micro‑batches (TWAP/VWAP algorithms).

• Choose High‑Liquidity Pairs: Stick with BTC, ETH, or top‑10 altcoins for big moves.

• Monitor Volatility: Avoid placing trades right before major news or weekend gaps