Liquidity in Forex Market means how active the Forex market is. The number of traders and the overall amount they trade is measured by how many. The foreign currency market is so liquid because it can be traded on weekdays 24 hours a day. It is also a very profound market with a turnover of almost 6 trillion dollars a day. Although volatility fluctuates as financial centres around the world open and close all day long, Forex trading is usually fairly high.
Most highly liquid forex currency pairs:
Who Provide liquidity in Forex Market?
Liquidity providers are major banks and financial companies which take their position during the initiation of the buy or sell transactions. Nevertheless, it is not directly, but via an intermediary between you and the supplier of liquidity. The brokers collect and charges all traders ‘ transactions on the interbank market. The more liquidity suppliers he has, the cheaper and less expansion the cost for you. The Forex brokers doesn’t matter if you are making money on trade or not after your payment has entered the interbank market as they have earned his commission.
But sometimes there is the so-called market makers who work not with liquidity providers. You don’t bring your transactions to the interbank market, and all your transactions are within the company. Thus, your business profit will be a loss for the Market Maker, and he will seek to prevent you from earning money by drawing buckers in forex charts tables, reducing your losses and preventing the withdrawal of funding.
So, this is important to approach the honest broker. Please check the list of liquidity providers you deal with prior to registering with a broker. The ECN Forex Brokers are better selected, they have the best prices, no spreading, small commissions and high transaction speed.