# Liquidity Depth Explained
### The Role of the Liquidity Parameter b
The value of **b** directly determines how steep or flat the cost curve is, which defines the market’s liquidity or “depth.”
#### **High liquidity (b = 100)**
* The curve is flatter
* Even large purchases move the price only slightly
* The market can absorb large trades without strong price swings
#### **Low liquidity (b = 20)**
* The curve is steep
* Even small purchases cause sharp price increases
* The market is highly sensitive and less liquid
In summary:
* A **large b** acts like a “buffer,” allowing heavy buy pressure without major price impact.
* A **small b** makes the market extremely reactive to trade volume.
