Why Is Forex Liquidity Important?

Liquidity refers to how easy it is to quickly buy or sell securities for a fair price. If there is high liquidity the bid/ask spread will be tighter and you can trade more without moving the market. On the other hand, in an illiquid market the spread between the bid and ask may be very wide and not very deep. I general, liquid currency pairs are those that are active and have high trading volume.

Similar Posts

  • Tokyo

    Tokyo, Japan(open 7 p.m. to 4 a.m.) is the first Asian trading center to open, takes in the largest bulk of Asian trading, just ahead of Hong Kong and Singapore. The currency pairs that typically have a fair amount of action are USD/JPY (or U.S. dollar vs. Japanese yen), GBP/USD (British pound vs. U.S. Dollar), and GBP/JPY…

  • New York

    New York (open 8 a.m. to 5 p.m.) is the second-largest forex platform in the world, watched heavily by foreign investors because the U.S. dollar is involved in 90% of all trades, according to “Day Trading the Currency Markets” (2006) by Kathy Lien.1 Movements in the New York Stock Exchange (NYSE) can have an immediate and powerful effect…

  • London

    London, Great Britain (open 3 a.m. to noon): The United Kingdom (U.K.) dominates the currency markets worldwide, and London is its main component.2 Forex. “Forex Market Hours: When is the Best Time of Day to Trade Forex?” London, a central trading capital of the world, accounts for roughly 43% of global trading, according to a report…