What is TWAP / Twapping? 📚
TWAP = Time Weighted Average Price.
It is a type of trading algorithm that is designed to execute a large trade by dividing it into smaller trades and executing them over a specified time period.
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TWAP = Time Weighted Average Price.
It is a type of trading algorithm that is designed to execute a large trade by dividing it into smaller trades and executing them over a specified time period.
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The chart above is a great example of someone twapping buys on Bitfinex.
This shows a very clear example.
This entity has been buying about 0.8-1 $BTC every minute for the past ~2 hours. This is shown in the CVD (Cumulative Volume Delta) below the chart.
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This shows a very clear example.
This entity has been buying about 0.8-1 $BTC every minute for the past ~2 hours. This is shown in the CVD (Cumulative Volume Delta) below the chart.
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Often, it's hard to recognize a TWAP as it is mixed into a lot of volume or is of such small/random size that it doesn't stand out between the other orders.
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Why do people TWAP?
The goal of TWAP is to minimize market impact and achieve a more stable and fair price for the trade. It is commonly used by institutional investors and asset managers to execute large trades without disrupting the market.
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The goal of TWAP is to minimize market impact and achieve a more stable and fair price for the trade. It is commonly used by institutional investors and asset managers to execute large trades without disrupting the market.
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In the case of crypto, liquidity is often not the best, especially on $ALTS.
This means even relatively small amounts can benefit from Twapping in and out of positions.
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This means even relatively small amounts can benefit from Twapping in and out of positions.
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