> For the complete documentation index, see [llms.txt](https://docs.usdfi.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.usdfi.com/usdfi-amm/understanding-automated-market-makers/how-to-execute-a-token-swap/price-impact.md).

# Price Impact

The change in the token's value resulting from a trade in a pool is referred to as **Price Impact**. This is calculated as the discrepancy between the current market value and the effect that the trade has on the overall liquidity within a pool. The degree of Price Impact experienced is contingent on the volume of the liquidity pool.

When there is *high liquidity* in the pool, the effect of your trade on the token's price may be minimal. In contrast, when *liquidity is low*, the impact of your trade on the token's price may be more significant. Consequently, a larger price impact may result in a less favorable overall price for the trade. 

It's important to keep in mind that the rate of price impact is *continually fluctuating* as the total value of the liquidity pool shifts based on the supply and demand of each token.

In the event of an anticipated high Price Impact, USDFI will issue a warning as the swap may result in a significant loss. The decision to proceed with the transaction despite the warning is at the user's own risk.