Liquidity 

Liquidity refers to how active a market is. It is determined by the number of traders actively trading and the total volume they are trading. One reason the forex market is so liquid is that it can be traded 24 hours a day on weekdays.

It’s also a very deep market, with nearly $ 6 trillion in daily sales. Although liquidity fluctuates as financial centers around the world open and close during the day, there are generally relatively high volumes of forex trading at all times. how drastically prices change in a market.

The liquidity of a market has a major impact on the volatility of market prices. Less liquidity generally leads to a more volatile market and leads to dramatic price changes; Higher liquidity generally results in a less volatile market where prices do not fluctuate as much.

Liquid markets like Forex tend to move in smaller increments as their high liquidity results in less volatility. More traders trade at the same time. Time generally leads to the fact that the price makes small movements up and down. However, drastic and sudden movements are also possible in the foreign exchange market. Because currencies are affected by so many political, economic, and social events, there are many events that cause prices to fluctuate.

Traders need to be informed about current events and stay up to date. in financial news to find potential gains and better avoid potential losses.