You got the direction right but still lost on the trade—sometimes you need to check liquidity. Keep this liquidity checklist if you trade U.S. stocks or crypto short-term. I find its approach practical: before placing an order, first check whether the order book can absorb your position. It prompts you to examine the bid-ask spread, order book depth, cancellation patterns, and one-sided execution volume to determine whether the market is normal, strained, or vulnerable to being swept by a single large order. It also incorporates flow and open interest data to identify situations where volume appears active but actual buying pressure is thinning. These checks should directly inform your trading decisions: Should you reduce position size? Will a market order suffer excessive slippage? Is your stop-loss placed where it’s likely to be triggered? What I especially like is that it requires you to actively seek counter-evidence—clearly outlining what conditions would invalidate your assessment—so you don’t panic at the first sign of irregularity and declare a liquidity crisis. You can integrate this into a research workflow with Codex or Claude Code, but you’ll need to first connect data feeds for order book and options information. If data is unavailable, leave it blank—don’t let AI fabricate a report claiming capital is fleeing based solely on a few candlesticks.
