The term “liquidity” is understood as such condition of certain goods, resources, securities at which they can be acquired or realized quickly and without essential losses in the price.
The highest level of liquidity are cash assets.
Liquidity = Trading Volume in the market
The main indicator of liquidity is trading volume.
Than more transactions are concluded with one or another asset, than higher its liquidity.
The daily volume of trade in the FOREX market amounts to trillions of US dollars, which exceeds many times the volume of world stock market.
That is why the FOREX market has the highest liquidity.
Faster & Accurate Execution with more Liquidity
In practice FOREX trading «liquidity» means, first of all, the ability quickly sell or buy one or another currency in the necessary volume.
Therefore, tools, which can be quickly sell or buy call highly liquid, and assets, the sale or buy of which takes a lot of time is low-liquid.
Liquidity provide market-makers – large participants of the market (such as banks), than more market-makers provide liquidity of the company, than higher the probability that the transaction will be possible to perform, regardless of the time and the trading sessions in the different countries of the world.
Banks aggregate Market Liquidity
The aggregator (provider) of liquidity is the large participant of the market uniting in a network the largest banks of the world, financial institutions and the funds, forming pool of a stream of the prices, quotations and news to smaller participants of the market such as brokers, the dealing centers, etc.
In keeping with its business model, XM carefully selects the best in the world liquidity providers and concluded with each of them of a cooperation agreement to provide the customers with access to the widest possible liquidity and qualitative execution of orders at the best prices on the FOREX market.