#Liquidity101

#Liquidity101

🔍 What Is Liquidity?

Liquidity is the ease of buying/selling an asset without causing big price moves. High liquidity → tight spreads & smooth fills; low liquidity → slippage, poor fills, or even failed orders.

📊 How I Evaluate Liquidity

Order Book Depth: Check bids/asks within ±1–2% of market price.

24h Volume: Higher volume generally means more participants.

Spread Size: Narrow spread = efficient market.

⚔️ Slippage Reduction Strategies

1. Use Limit Orders: Lock in price rather than chasing market orders.

2. Scale In/Out: Break large trades into smaller chunks.

3. Time Your Trades: Trade during peak volume hours (e.g., Europe/US overlap).

4. Choose Venue Wisely: Opt for CEXs or DEX pools with proven depth.