Definition ∞ Trading Firepower refers to the total capital, liquidity, and available leverage that an individual trader or institutional entity possesses for executing transactions in financial markets. This metric indicates their capacity to influence market prices and liquidity through their trading activities. It reflects their overall financial strength and market presence. This directly impacts their market influence.
Context ∞ Discussions about trading firepower frequently appear in crypto news when analyzing the impact of large institutional investors or whales on digital asset prices. A significant increase in collective trading firepower can signal potential market movements or shifts in investor sentiment. Understanding this concept is important for interpreting market dynamics and assessing potential price volatility.
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