TRADING & AMMS
Market Depth
Definition
Market depth refers to the market's ability to sustain large orders without significantly impacting price. Deep markets have substantial liquidity available at various price levels.
Example
Example
ETH has deep market depth, so trading $1M causes minimal price impact, unlike small altcoin pairs with shallow depth.
Risks to Consider
Risks
- Shallow markets
- High slippage
- Liquidity fragmentation