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Importance of high liquidity in forex market


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29 replies to this topic

#21
yasrielkarunia

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The forex market is a market that is not centralized. Unlike the New York Stock Exchange, the forex market has no place or physical location. Every transaction is done electronically, in which the banks transact in a market called Interbank Market. In addition, the forex market is also inhabited by other market players such as hedge funds, retail traders or financial institutions. In the year 2013, recorded average transactions in the forex market reached $ 5.3 trillion every day. And it may continue to grow over time. This is what makes the forex market the largest market in the world, and the most liquid market to date. So the trading volume is very high and the number of transactions is growing every time. In addition, the forex market is also open every day except weekends.
 
Trading volume in the forex market has passed $ 5.3 trillion every day. By looking at the point of view of a trader like me and you, of course it is an attraction of a liquid market like forex. Of course there are times when prices move with high volatility. Often beginner traders say that prices move because of the influence of an economic news or the other. In fact, this high volatility movement is driven by liquidity, where liquidity tends to be based on expectations from market participants.
 
Well, of course for you who want to gain profit in this forex market must understand how liquidity began. This means that liquidity is formed from the understanding, expectation, expectation or prediction from market participants. That means the movement of the forex market is driven by a sentiment from the market participants themselves. Let's take an example when the price reaches a resistance level and when volume is observed, we can conclude that liquidity will enter the market. Either it will breakout / break the level, or go back and move the opposite.
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#22
sidejob

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And since that is not centralized, forex has bigger liquidity and compared to stock exchange the amount of turnover is bigger. Forex is the whole world while Stock is just for one country. The liquidity is important because without that you won't see any spot trading or near instant buy and sell act in the market, especially if that is low enough.


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#23
myregister

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Liquidity by definition is the ability of a valued item to be transferred into currency on demand so in short you can trade and get that in nearly instant time. So when you’re trading currencies or Foreign Exchange, you’re trading a market that is by itself, liquid. If the market is not liquid i think you will get re-quote more than you ever imagine.


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#24
sidejob

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So by that definition we can say that a high liquidity market is preferable in almost every single cases. It is good to have high liquidity because the market will be easy to find the match of our order and make the execution of our orders faster than before, it is good also for fx's market movement.


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#25
aliforex

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So by that definition we can say that a high liquidity market is preferable in almost every single cases. It is good to have high liquidity because the market will be easy to find the match of our order and make the execution of our orders faster than before, it is good also for fx's market movement.

of course we must really try as much as possible to master it well in order to better master it and as long as the trader more successful it will give it easy and profitable


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#26
myregister

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High liquidity market is good because it means that you can open and sell the price in faster way rather then illiquid market, and talking about the movement it would be in smaller fraction, so liquid market in some cases is not volatile but if there is a factor which driven most of the market, it could cause a huge volatility even more than illiquid market's movement can do.


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#27
sidejob

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High liquidity market is good because it means that you can open and sell the price in faster way rather then illiquid market, and talking about the movement it would be in smaller fraction, so liquid market in some cases is not volatile but if there is a factor which driven most of the market, it could cause a huge volatility even more than illiquid market's movement can do.

But never hope that the price would surge so much, for example of what i said before is bitcoin vs USD. BTC price can rise like few hundred coins so easily while USD is hard, it takes nearly 3/4 or even more at one trend to make something like that but in this current market is nearly impossible.


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#28
myregister

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But never hope that the price would surge so much, for example of what i said before is bitcoin vs USD. BTC price can rise like few hundred coins so easily while USD is hard, it takes nearly 3/4 or even more at one trend to make something like that but in this current market is nearly impossible.

Well BTC and USD example you offer there is too much volatile and actually i don't really like it compared to foreign exchange . I know forex is somewhat slow in terms of movement/volatility it is just dozen to hundred pips but with larger capital we have and plus the leverage, you can earn hundred to thousand dollars per month depend on the way you trade.


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#29
Gee Dee

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Forex a potential market which is providing a great liquidity to the traders which makes forex market one of the largest financial markets in the world. As forex is a decentralized market, the greatest advantage of it: we can convert one currency for another at the most easiest way, transaction can be executed at any place and at any time, day or night. A greater liquidity, a 24 hour transaction makes forex market very appealing to the millions of people today.


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#30
junrose123

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Liquidity is a great indicator of potential profit in the Forex trading and must be taken advantage since it is very rare to happen. It must be given much importance and consideration for future benefits.


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