The spread is visible. Market impact is the hidden bill.
Before trading a thinly traded altcoin, check more than 24-hour volume:
• Spread: how far apart are the best bid and ask?
• Depth: how much liquidity sits within 1% of the current price?
• Order size: would your trade consume several price levels?
Example: a token shows a last price of $1.00, but your buy fills at an average of $1.03. That is 3% above the displayed last trade—before fees. The last price was never a promise of your execution price.
A limit order caps your purchase price, but may fill only partly or not at all. Visible order-book liquidity can also disappear before execution.
Plan the exit as carefully as the entry: could you sell the same size if liquidity thins out?
A good thesis cannot cancel bad execution.
#CryptoEducation #Altcoins #RiskManagement
Before trading a thinly traded altcoin, check more than 24-hour volume:
• Spread: how far apart are the best bid and ask?
• Depth: how much liquidity sits within 1% of the current price?
• Order size: would your trade consume several price levels?
Example: a token shows a last price of $1.00, but your buy fills at an average of $1.03. That is 3% above the displayed last trade—before fees. The last price was never a promise of your execution price.
A limit order caps your purchase price, but may fill only partly or not at all. Visible order-book liquidity can also disappear before execution.
Plan the exit as carefully as the entry: could you sell the same size if liquidity thins out?
A good thesis cannot cancel bad execution.
#CryptoEducation #Altcoins #RiskManagement