Liquidity: The Silent Force Behind Every Trade
If there’s no liquidity, price doesn’t matter.
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🕒 5:08 PM
📅 Jan 08, 2026
✍️ By PolakaNagendraReddy
Liquidity refers to how easily an asset can be bought or sold without affecting its price.
High liquidity means many buyers and sellers are active in the market.
Low liquidity causes slippage, where prices move against you during a trade.
This is why small-cap tokens often show extreme price swings.
Liquidity pools on DEXs allow users to trade without traditional order books.
Liquidity providers earn fees but also face risks like impermanent loss.
Traders who ignore liquidity often pay hidden costs without realizing it.
Understanding liquidity helps you trade smarter, not harder.