1. The Impact of Market Liquidity
In any market, the ability to trade at a specific price depends on liquidity, which means the number of active buyers and sellers available at that moment.
When there are not enough participants to "match" your trade at the highest current price, the system must look for the next available buyers. This process is known as trading at an Average Price. To ensure your trade is completed, it is filled across multiple price levels, which can result in a final selling price that is slightly lower than the peak market rate.
2. "Less Profit" vs. "Losing Money"
We understand that seeing a lower execution price can be concerning. However, it is important to distinguish between a loss and a reduced return:
- Your principal is safe: This situation does not mean you have lost your initial investment.
- Realizing gains: You are still receiving a return on your trade. The difference in price simply means you have captured a smaller portion of the profit due to current market depth, rather than incurring a capital loss.
3. Your Alternative: Waiting for Settlement
If you have a specific return target in mind, you are not required to exit during periods of low liquidity.
By choosing to wait for the market to settle, you allow liquidity to stabilize. Once the market settles, the system can fulfill the transaction at the intended market return, ensuring you receive the full amount you anticipated without the "average price" adjustment.
4. Improving Your Experience
To help you navigate these market conditions more effectively, we are preparing the following updates:
- Enhanced Risk Notifications: You will receive clear alerts when liquidity is low before you confirm a trade.
- Educational Resources: We are launching a guide to help you understand market depth and how to time your exits for the best possible returns.