The forex online trading market is often described as the world’s most liquid financial market, but that doesn’t mean that currencies are not subject to varying liquidity conditions that currency traders need to keep in mind.
The forex online trading market is often described as the world’s most liquid financial market, but that doesn’t mean that currencies are not subject to varying liquidity conditions that currency traders need to keep in mind. For that reason, is important to understand the whole liquidity scenario, as well as the services and solutions offered by brokerages to meet their client’s needs. Liquidity refers to the amount of market interest present in a particular market at any given time. From an individual trader’s perspective, liquidity is usually experienced in terms of the volatility of price movements. A highly liquid forex online trading market will tend to see prices move very gradually and in smaller increments. A less liquid market will tend to see prices move more abruptly and in larger price increments.A market that is liquid has many trades and is composed of many traders. Due to its volume of transactions, the forex market is extremely liquid because hundreds of banks and millions of individuals trade currencies everyday.Usually, brokerages offer several types of liquidity services to their clients, depending on the trading needs of each. A clearing account is an account that allows a FX or CFD firm to hedge clients’ trades and help mitigate the market risk. Each brokerage firm offers its own spreads and conditions to their clients, giving individual customers or corporate clients the best liquidity solutions that come from solid financial relationships. A liquidity account is an account that a brokerage holds at another firm in order to diminish market risk. It is advisable for clients to have at least two liquidity accounts, as to mitigate risk in a more efficient way among a range of different trading counterparts, especially in times of high forex online trading volatility. Generally brokerages have industry experienced teams that can help decide clients what accounts they need and for what. They offer technological solutions that are usually needed for integrations and other software purposes, as sometimes clients may not want to use the available trading platforms.Corporations, brokers, hedge funds and money managers who require always real time trading capabilities, companies integrating trading into their treasury systems and brokers hedging the exchange rate exposure of their equity positions are eligible for these types of technological solutions. Finally, forex online trading brokerages always offer first priority on dealing and tech support as well as a personal Tradeview customer service representative, 24 hours a day from Monday to Saturday. If you have any questions about what type of liquidity solution you need to enhance your forex trading, contact your forex brokerage and sign up for your account today.