โYou spot a potential low cap coin. You buy $1,000 at the bottom. A few weeks later, it goes up 100x. Your account shows $100,000. You feel like a genius. You place an order to sell everything to lock in your profit. But the price crashes 50% immediately, or your order is stuck and doesnโt fill. You only get a fraction of that $100,000. โ โWhy? โ๐ธ The Nature of Price and Liquidity: โMarket Price is the price of the last executed trade. It is a surface number. โLiquidity is the ability to convert assets to cash without significantly moving the price. It's the submerged iceberg. โThere is a paradox between price and liquidity that when a coin goes parabolic, liquidity usually does not increase accordingly. The price may be $10, but the Market Depth will only accept a sell order of $100 at that price. โ โ๐ธWhen you x100 in a small project, you inadvertently become a Whale in that pond; your position is too big for the exit door. When you Market Sell $100,000, you wipe out all pending Buy Orders from the top down to the bottom. Your average fill price will be much lower than the peak price. โ โ๐ธ Selling a low cap coin is almost impossible. So you need an exit strategy. โDo not wait for the peak. Sell while the crowd is FOMOing to buy. That is when Buy Liquidity is deepest. โDo not Greed The Top. If you try to sell at the exact top, there are no buyers left. Accept selling 10 to 20% early to guarantee execution. โ โBefore dreaming of millions, look at the Order Book. If the Bid side is empty, your millions are meaningless. โ๐น Unrealized PnL in the exchange is not money. Realized profit that cannot be withdrawn isn't money either. Liquidity is more important than Price. โ โDo you own liquid assets or nonconvertible virtual numbers?
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๐ช๐ต๐ ๐๐ฎ๐ป ๐ฌ๐ผ๐ ๐๐๐ ๐ง๐ต๐ฒ ๐๐ผ๐๐๐ผ๐บ ๐๐๐ ๐๐ฎ๐ป ๐ก๐ผ๐ ๐ฆ๐ฒ๐น๐น ๐ง๐ต๐ฒ ๐ง๐ผ๐ฝ?
โYou spot a potential low cap coin. You buy $1,000 at the bottom. A few weeks later, it goes up 100x. Your account shows $100,000. You feel like a genius. You place an order to sell everything to lock in your profit. But the price crashes 50% immediately, or your order is stuck and doesnโt fill. You only get a fraction of that $100,000.
โ
โWhy?
โ๐ธ The Nature of Price and Liquidity:
โMarket Price is the price of the last executed trade. It is a surface number.
โLiquidity is the ability to convert assets to cash without significantly moving the price. It's the submerged iceberg.
โThere is a paradox between price and liquidity that when a coin goes parabolic, liquidity usually does not increase accordingly. The price may be $10, but the Market Depth will only accept a sell order of $100 at that price.
โ
โ๐ธWhen you x100 in a small project, you inadvertently become a Whale in that pond; your position is too big for the exit door. When you Market Sell $100,000, you wipe out all pending Buy Orders from the top down to the bottom. Your average fill price will be much lower than the peak price.
โ
โ๐ธ Selling a low cap coin is almost impossible. So you need an exit strategy.
โDo not wait for the peak. Sell while the crowd is FOMOing to buy. That is when Buy Liquidity is deepest.
โDo not Greed The Top. If you try to sell at the exact top, there are no buyers left. Accept selling 10 to 20% early to guarantee execution.
โ
โBefore dreaming of millions, look at the Order Book. If the Bid side is empty, your millions are meaningless.
โ๐น Unrealized PnL in the exchange is not money. Realized profit that cannot be withdrawn isn't money either. Liquidity is more important than Price.
โ
โDo you own liquid assets or nonconvertible virtual numbers?
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