Liquidity is one of the important factors often overlooked by new traders. In fact, liquidity can determine whether you buy low or ultimately incur losses due to slippage.
My method for assessing liquidity before entering an order
- Look at Daily Volume
- Check the Order Book
- Observe Slippage in Order Simulation
- Check Trading Pair Liquidity
My strategy to avoid slippage
- Use Limit Orders, Avoid Market Orders
- Avoid Large Orders in Microcap Tokens or DEXs Without Checking Liquidity
- Split Orders into Smaller Parts
- Avoid Entering Orders During High Volatility (e.g., during FOMC or major listings)
My practical experience: I once swapped a new token on a DEX without checking liquidity. I intended to buy $500, but due to low liquidity, I only received tokens worth $420, with the remainder lost due to high slippage (16%).
Since then, I always check the impact and liquidity pool before entering a new token - a valuable but costly lesson.
Conclusion: Liquidity is key to effective price execution.
The higher the liquidity → the smaller the slippage → the more accurate our strategy.
🔑 Key to success: "Don’t just focus on price direction, also pay attention to how you enter and exit the market."
