All terms
How much you can buy or sell without moving the price much.
Liquidity is depth. A liquid market absorbs a large order with a small price change. An illiquid one moves several percent on a modest trade, and much more on the way out than on the way in.
This is the risk beginners underestimate most. Getting into a thin position is easy. Getting out at anything like the price you see on the screen often is not.
Check the pool depth before buying a small token. If the pool holds 40000 dollars, a 5000 dollar buy will move the price hard.
That liquidity is a number on a dashboard. It is your ability to leave. A pool showing decent liquidity can still cost you a large percentage on the way out if it is concentrated or if it disappears when the price falls, which is exactly when you want it.
Common questions
How much liquidity is enough?
Is high volume the same as high liquidity?
Where this comes up on the site
The guides that actually use this word, rather than a list of everything we have written.
Where to go next
More trading terms
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