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Without enough transmission fluid or effective fluid, your transmission will start acting out. The ideal fluid temperature is under 175 degrees, but as fluid ages it starts to break down and lose its capacity to cool down the transmission. This is when transmission overheating occurs. At 220 degrees, varnish forms.
Transmission fluid is a slippery liquid that acts as a lubricant for all of the moving parts inside your transmission. In an automatic transmission, this fluid also serves as a coolant and a viscous fluid that transmits power from the engine to the transmission. A variety of fluids are used for different transmissions.