Traction is a measure of how long it takes for a character to stop moving from a sideways force when grounded. Characters with low traction slide farther than others after walking, dashing, wavedashing, being hit by an attack while grounded, and so on.
Having high traction affords greater ground control over a character, so high traction is generally an advantage. Characters with low traction generally require more precise movement across the ground and cannot punish attacks as effectively out of shield since they will get pushed further away from the opponent. However, there are cases where low traction is useful: low traction is necessary for a long wavedash in Super Smash Bros. Melee and a long DPC in Brawl, and there are cases where sliding away from a shielded attack can help escape later hits of it. Luigi is well-known for having the least traction of any character in all games; this originates from his low traction in many of the Mario platformers, which balances out his higher jumping.
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