@humphran

Illiquid tokens suffer high market impact. Estimating cost involves modeling order book elasticity: measuring slippage per unit of trade size. Tools like Amihud’s illiquidity ratio help approximate expected price movement for given volumes. Traders should set stop-loss triggers based on impact-adjusted thresholds rather than nominal percentages. For instance, if selling 5% of position moves price 3%, stops must factor this slippage into exit levels. Incorporating depth metrics ensures realistic stop placement. In practice, prudent sizing and staggered execution reduce shocks, preserving capital while recognizing structural illiquidity risk.

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