Liquidity

Refers to the relationship between transaction size and price movements. For example, a market is “liquid” if large transactions can occur with only minimal price changes. The Forex market is described as being very liquid because transactions that are carried out in this market are in the region of hundreds of thousands to millions and billions of dollars. Where traders can only afford hundreds to thousands of dollars, market makers step in to acquire positions from the liquidity providers so as to bridge the liquidity gap, and these positions are resold to such traders in smaller chunks.

By |2018-09-04T14:35:37+00:00September 4th, 2018|0 Comments

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