How Does Market Depth Affect the Degree of Slippage in a Trade?

Market depth refers to the volume of buy and sell orders at various price levels in the order book. High market depth means there are large quantities of orders near the best bid and ask prices.

This high liquidity reduces slippage because a large trade can be executed without significantly moving the price through multiple levels of the order book. Low market depth increases slippage risk.

What Is a ‘Virtual Liquidity’ Mechanism in Some Derivatives AMMs?
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When Is a Large Market Order More Likely to Cause Significant Slippage in a Cryptocurrency Pair?
How Does the Concept of “Liquidity Mining” Aim to Reduce Slippage on DEXs?
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How Does ‘Slippage’ Affect Large Trades in a Liquidity Pool?

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