Price impact explained

Where it comes from

Most Solana trading happens against automated market maker pools holding two tokens. The ratio between them sets the price.

When you buy, you add one token and remove the other. The ratio shifts and the price moves against you as your order fills. The larger your order relative to the pool, the further it moves.

Pool depth is what matters

A $10,000 order against a $10m pool barely registers. The same order against a $50,000 pool is catastrophic — you would be buying a fifth of everything available.

This is why liquidity, not market cap, is the number to check before sizing a position. A token can show an impressive valuation and still be impossible to exit.

Reducing it

Trade smaller. Impact grows faster than order size, so several small orders usually cost less in total than one large one.

Use an aggregator, which splits across pools so no single one absorbs the whole order.

Choose deeper pairs. Routing through SOL or USDC is often cheaper than a direct route between two thin tokens.

The exit problem

Price impact applies in both directions, and people consistently forget the second one. If buying in moves the price 8%, selling out will move it at least as much — and by then the pool may be thinner than when you entered.

Before buying an illiquid token, look at the quote for selling the same position. If that number is alarming, the position is too large for the market.