Are liquid or illiquid cryptocurrencies more suitable for short-term trading?

3 answers

• Jan 14, 2022 · 3 years ago
  In short-term trading, liquid cryptocurrencies are generally more suitable. Liquid cryptocurrencies refer to those with high trading volumes and market depth. They are easier to buy and sell quickly, allowing traders to enter and exit positions with minimal slippage. This is especially important for short-term traders who aim to capture quick price movements. However, it's worth noting that high liquidity can also attract more competition and potentially increase volatility.
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• Jan 14, 2022 · 3 years ago
  When it comes to short-term trading, illiquid cryptocurrencies may not be the best choice. Illiquid cryptocurrencies have low trading volumes and limited market depth, making it harder to buy or sell large amounts without significantly impacting the price. This can result in higher slippage and increased risk for short-term traders. Additionally, illiquid markets are more susceptible to manipulation and price manipulation attempts, which can further complicate short-term trading strategies.
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• Jan 14, 2022 · 3 years ago
  From my experience at BYDFi, a digital currency exchange, I would recommend short-term traders to focus on liquid cryptocurrencies. Liquid markets provide better opportunities for short-term trading due to their higher trading volumes and tighter bid-ask spreads. However, it's important to conduct thorough research and analysis before making any trading decisions, regardless of whether the cryptocurrency is liquid or illiquid.
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