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How BIG is the Forex market?
The Forex market is the BIGGEST market in the world. It’s bigger than the stock and commodities markets combined!
The average volume traded per day in the Forex market is a staggering $5.3 trillion (that’s $5.3 followed by 18 zero’s), compared to the New York Stock Exchange (NYSE) which is a mere $22.5bn.
With such a large volume traded in the Forex market, a huge pool of liquidity naturally arises.
What is Liquidity?
Liquidity is the ease with which an asset can be converted into its cash value.
The term liquidity can apply to any asset you may own. How long will it take you to get the cash equivalent for your phone? Car? Tv? Currency Pair?
In Forex trading it is imperative that there is a huge liquidity pool to be able to match the huge volume of trades made every second.
When you open a long (buy) position, someone must therefore take the other side of the trade with a short (sell) position (and vice versa).
So therefore, when you buy something – someone has to be selling it, and when you sell something – someone has to be buying it. This is how liquidity in Forex works, and it is the reason that means you are able to SELL a currency pair before you own it.
Luckily, the Forex industry has great liquidity allowing traders to open and close positions instantaneously!
– The Forex market is the BIGGEST market in the world. It’s bigger than the stock and commodities markets combined!
– The average volume traded per day in the Forex market is around $5.3 trillion.
– Liquidity is the ease with which an asset can be converted into its cash value.
– The Forex industry has great liquidity which enables traders to open and close positions instantaneously!