Order Flow Getting Started Tutorial
Large-amount entrusted orders (main orders)
Liquidation Heatmap
Liquidation Map
Basic introduction to order flow
What is order flow?
Order Flow Getting Started Tutorial
Order flow
What is the long-short position accounts ratio?
Manual of contract data for newer
Risk management in contract trading
Commonly used indicators for contract data
Costs in cryptocurrency trading
What positive or negative funding rates means?
Arbitrage opportunities in the cryptocurrency market
What are terms mark price、last price and estimated liquidation price?
What determined funding rate?
Basis and premium
Liquidation and delivery
What are USDT contract and USD contract?
What difference between open interest and trading volume?
Differences between cryptocurrency perpetual contract trading and leverage trading
How to keep balance for price in perpetual contracts and spot?
What categories of cryptocurrency derivatives?
What are Golden Cross and Death Cross, and how are they used in trading?
What is liquidity
What is VWAP indicator and how to use it in cryptocurrency trading?
What is the RSI indicator, how to see overbought and oversold?
How to Read Order Book Data?
The Analysis and Trading Applications of Long-Short Position Ratio and Open Interest
The Significance and Application of Cryptocurrency Liquidation Data
How is funding rate calculated for cryptocurrency perpetual contracts?
How to interpret the open interest data of cryptocurrency contracts?
What is the purpose of the cryptocurrency funding rate?
What is Top trader account long/short ratio
What is exchange top trader positions long/short ratio
What is Bitcoin open interest?
What is perpetual contract funding rate?
What is BTC liquidation or what is cryptocurrency liquidation?

What is liquidity

Liquidity is the ability of funds or assets in the market to be quickly converted into actual trades. In financial markets, liquidity is often used to describe the level of trading activity and transaction costs for a particular asset or market.

An order book is a list that records all buy and sell orders in the market, displaying the current supply and demand for a trading asset. The order book is typically arranged based on price, from the lowest to the highest, and shows the quantity of buy orders and sell orders at each price level.

Through the order book, the following information about liquidity can be obtained:

  1. Market depth: The order book shows the quantity and prices of buy orders and sell orders. Greater depth indicates higher market liquidity, as there are more buy and sell orders available for execution.
  2. Bid-Ask spread: The difference between the highest buy order price and the lowest sell order price in the order book is called the spread. A smaller spread indicates higher market liquidity, as the buy and sell prices are closer together, making trading easier.
  3. Quick execution capability: Markets with high liquidity typically have a large number of buy and sell orders, allowing assets to be converted into cash more quickly. This means that investors can buy or sell assets quickly without significantly impacting the price.

The order book is important for traders as it provides real-time information about the supply and demand in the market. Traders can use the information from the order book to assess the level of market liquidity and potential price movements. When there are more buy orders in the order book, indicating higher liquidity, prices may rise. Conversely, when there are more sell orders, indicating lower liquidity, prices may fall.

In summary, liquidity refers to the ability of funds or assets in the market to be quickly converted into actual trades. The order book, as an important indicator of market liquidity, provides real-time insight into the supply and demand situation in the market.

Information content does not constitute investment advice, investors should make independent decisions and bear their own risks