🧐👉You see a low-cap potential coin. You buy $1,000 in the fund. A few weeks later, it rises 100x. Your account shows $100,000. You feel like a genius. You place an order to sell everything and secure your profits. But the price drops 50% immediately, or your order is stuck and does not execute. You only get a fraction of that $100,000. Why?
🔸 The nature of price and liquidity:
The market price is the price of the last executed transaction. It is a superficial number.
Liquidity is the ability to convert assets into cash without significantly moving the price. It is the submerged iceberg.
There is a paradox between price and liquidity that when a coin becomes parabolic, liquidity typically does not increase accordingly. The price may be $10, but the market depth will only accept a sell order of $100 at that price.
🔸 When you multiply by 100 in a small project, you inadvertently become a whale in that pond.
Your position is too large for the exit door.
When you sell in the market $100,000, you clear all pending buy orders from top to bottom. Your average fill price will be much lower than the highest price.
🔸 Selling a low-cap coin is almost impossible. So you need an exit strategy.
Don't wait for the peak. Sell while the crowd is FOMOing to buy. That's when the buying liquidity is deepest.
Don't be greedy at the top. If you try to sell at the exact peak, there are no buyers left. Accept to sell between 10% and 20% earlier to ensure execution.
Before dreaming of millions, look at the order book. If the ask side is empty, your millions mean nothing.
🔹 Unrealized PnL is the trading money. Realized profits that cannot be withdrawn are not money either. Liquidity is more important than price.
Do you have liquid assets or non-convertible virtual numbers?
News is for reference, not investment advice. Please read carefully before making a decision 👊🏻😎
