@reeeeeeeee
Liquidity depth measures how much capital is needed to move the price by a certain percentage. Thin order books can lead to larger price swings from smaller trades, increasing volatility risk. During periods of low liquidity—such as weekends or holidays—large players can more easily trigger stop hunts. Analyzing liquidity across multiple exchanges helps traders avoid false breakouts and identify where genuine demand or supply exists. Depth improves with healthy market participation and can quickly vanish during panic selling.
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