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Liquidity Relative to Position Size

Liquidity relative to position size compares the size of a proposed trade with the amount of liquidity available in the market.

Why it matters to you

The same market can be highly liquid for one trader and poorly liquid for another. A market with $20,000 of usable liquidity may be more than sufficient for a $200 position but problematic for a trader attempting to enter or exit $50,000. Liquidity therefore needs to be considered relative to the size of the trade.

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