own it, they pay attention to the.S. Forex is referred to as the most liquid market in principle. If you have open positions, you should be always prepared for surprising increase of liquidity rate, while there is a low liquidity in the market. Liquid markets tend to follow crowd behavior, which is easier to read than the single investor behavior, characteristic of the less liquid markets/instruments.
Liquidity minimizes losses there is no worse place to be than the wrong side of a trade in currency conversion us dollar to japanese yen an illiquid market. In other words, the lower is liquidity, the easier is to move the market. There are also other significant reasons why the.S. A liquidity hole caused a massive drop in CHF pairs. Imagine that you have Iphone, which you need to sell. As you can see, there is an obvious unavailability of liquidity in the Market of grandmothers wardrobes. Individually, some of the biggest names in the banking sector stand out in the forex market. In the stock market charts, like the Facebook chart below, there are plenty of gaps in them. But there are other participants as well, such as investment and hedge funds, pension funds, insurance companies, corporations etc. They allow clients to buy and sell currencies and hedge their clients positions in the real market or internally. A liquid market is more logical, it follows price patterns like trends, support and resistance levels etc. But it doesnt mean at all that currencies are not sensitive to the influence of liquidity: this factor must be taken into account even by Forex traders.