๐ง What is liquidity and why does it matter in crypto? ๐ค๐ธ
If you don't understand what liquidity is, you're likely losing money even on good entries ๐ฐ
๐ Liquidity is the volume at which you can buy or sell an asset without a significant price movement.
๐ข High liquidity = ๐ฅ quickly in, quickly out, minimal slippage
๐ด Low liquidity = ๐ bought โ price shot up, sold โ dropped down
โ Why is this important for a trader?
๐ฅ When you open a position in a pair with low trading volume โ your order can โmoveโ the market!
๐ This means you'll buy higher than you wanted and sell lower than you planned. This = losses, even if the idea was correct.
๐ How to check liquidity before entering?
โ Look at:
โข ๐ข Trading volumes over the last 24 hours
โข ๐ Order Book
โข ๐ The spread between buy and sell prices
๐ The smaller the spread and the larger the volume โ the better the liquidity.
๐ฌ Want more clear and useful breakdowns like this?
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