The Real Cost of Market Impact: What TWAP and Limit Orders Actually Save You
·9 min read
TL;DR Market impact is the price you move against yourself by trading a big chunk into limited liquidity. On a typical AMM pool, the bigger your trade is relative to the pool, the worse it gets. TWAP
TL;DR Market impact is the price you move against yourself by trading a big chunk into limited liquidity. On a typical AMM pool, the bigger your trade is relative to the pool, the worse it gets. TWAP orders tackle it directly: they slice one big trade into smaller parts spread over time, so each part moves the price less and the market has time to settle between them. Limit orders do a different job: they set the worst price you'll accept. They don't shrink your impact on their own, but they sto
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