💧 #Liquidity101 Why is liquidity not just water, but your trading oxygen?
In crypto trading, liquidity refers to how easily you can buy or sell an asset without significantly impacting its price. High liquidity = quick execution of trades at the desired price. Low liquidity = slippage, delays, or even trade rejection.
📉 Once, I bought a promising token on a DEX with low liquidity — and got a price 8% worse than I expected. Conclusion: always check trading volumes, order book depth, and the spread between bid/ask.
🔍 Before entering a position, I look at:
daily trading volume;
how many orders are around my price;
how the price moved during recent large trades.
🛡️ To avoid slippage:
I use limit orders instead of market orders;
I break large trades into several smaller ones;
I don’t enter during high volatility.
Liquidity = control. And control is the trader's strength 💪
