Why it matters to traders
Major pairs such as EUR/USD are extremely liquid most of the time, which keeps spreads tight. Liquidity drops at certain hours, over holidays and in exotic pairs, which usually means wider spreads and more slippage.
Forex glossary
What Is Liquidity in Forex Trading?
Definition
How easily something can be bought or sold without moving its price. The more buyers and sellers, the more liquid the market.
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SaveRelated terms
- Spread
- The difference between the buy (ask) price and the sell (bid) price of a currency pair. It is the main trading cost on most forex accounts.
- Volatility
- How much and how quickly a price moves. Highly volatile markets move further in less time, which raises both opportunity and risk.
- Slippage
- The difference between the price you expected when placing an order and the price at which it was actually filled.