#Liquidity101

Liquidity in crypto trading refers to how easily an asset can be bought or sold without significantly affecting its price. High liquidity ensures tighter spreads, faster execution, and less slippage—crucial for active traders. Low liquidity, on the other hand, can lead to volatile price swings and poor order fills.

To evaluate liquidity before entering a position, check the 24-hour trading volume, order book depth, and bid-ask spread on reputable exchanges. Assets with narrow spreads and deep order books typically offer better liquidity.

To reduce slippage, use limit orders instead of market orders, especially in volatile or low-volume markets. Splitting large orders into smaller ones, trading during peak market hours, and avoiding illiquid tokens also help improve execution.