About The Market Size And Liquidity
Synopsis
There are several features that make the foreign exchange market rather unique and a little complicating. Thus it is not really a suitable endeavor for the faint hearted.
Among the elements it involves are the actual trading which is done in large volumes, the extreme liquidity conditions of the market, the large number and variety of traders and commodities available at any given time, the geographical dispersion of its participants, the long trading hours.
The aspect that makes all these so volatile is the variety of possible effects the exchange rates can have on the actual trading or transactions.
Inside Info
The various markets size trading could run in the billion to the trillions and the liquidity factor are also high in terms of percentages.
These market size participations run on a daily average turn over which is always significantly high even if it does not include global trading exercises.
Being the most liquid financial market in the world its traders include major banking houses, central banks, institutional investors, currency speculators, corporations, governments and retail investors.
As stated before this style of trading is very volatile indeed. In being so the profound effects of the currency market is almost always unpredictable. Political climates, international trading relationships, events and other underlying factor may contribute to the volatility and the possible liquidity rations involved.
All these various aspects contribute to the uniqueness of the market and its liquidity. An unphantomal number of traders and transactions are possible within a 24 hour time window.
In comparison with other markets, trading the exchange rate settings are with fairly low net margins. Some may even consider it the real market for perfect competition even with all the possible risks.
All these factor into the liquidity of the trading environment. Liquidity is a very important element because it determines how easily the price can change. This liquidity element of the forex trading enables huge trading volumes to occur with little effort but a lot of skill.
