#Liquidity101 ๐ง #Liquidity101: The Lifeblood of Every Trade
If you donโt understand liquidity, you might be leaving profits on the table โ or worse, getting wrecked. Letโs simplify it ๐
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1๏ธโฃ What Is Liquidity?
Liquidity = How easily you can buy/sell a token without big price changes.
โ๏ธ More buyers + sellers = smoother trades
๐ Less liquidity = price jumps + slippage
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2๏ธโฃ Why Liquidity Is ๐
โ Instant trade execution
โ Lower slippage
โ Tighter spreads
โ Easier exits during market panic
๐ฅ Especially crucial for large trades & volatile tokens
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3๏ธโฃ Where to Check Liquidity?
๐ On CEXs:
โ Look at order book depth & 24h volume
๐ On DEXs:
โ Check TVL, LP size, slippage %
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4๏ธโฃ CEX vs DEX Liquidity
๐๏ธ CEX: Centralized market makers = deeper liquidity
๐ DEX: Depends on users providing liquidity (LPs) โ varies by pair
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5๏ธโฃ Low Liquidity = High Risk
โ ๏ธ You might:
Pay more than expected
Get stuck in illiquid tokens
Face price manipulation in thin markets
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๐ฌ Ever been stuck in a low-liquidity token?
Drop โSLIPPED ๐โ if yes โ or โSMOOTH ๐งโ if you play it smart!