What is Liquidity?. Liquidity measures how easily you can buy or sell without moving the price. Deep markets reduce slippage and execution risk.
How it works
Order books, market makers, and liquidity pools provide quotes. Wider spreads and shallow depth increase trading cost.
Why it matters
High liquidity improves fair pricing and exit flexibility—crucial during volatility.
Common pitfalls
- Trading thin pairs with large orders
- Ignoring pool depth and price impact
- Equating volume spikes with sustainable liquidity
Quick example
Before swapping, you check pool depth to estimate slippage at your trade size.
See also
- DEX
- Slippage
- Whale
TL;DR: What is Liquidity? defined in plain English with practical next steps.
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