Liquidity I - Dummy

When we talk about liquidity, many things come in mind. But in forex, it is what drives the market. The market moves like water, it flows from certain areas, each move with a designated purpose.

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Theory

The way EXODUS will be structured is in a very concise manner. We will begin by going through the concepts of liquidity to make sure you understand how price is delivered in the forex market.

The most important aspect to begin to understand is when price is considered illiquid.

“When price is illiquid, it is considered less dense” -> less volume needed to move the market...


Example as followed;



I like to refer to liquidity as the measurability of how easy price can be transacted. When the market is illiquid, buying/selling an asset will cause more of a drastic change in the assets price -> less transactable.

When the market is transactable, the buying/selling of that asset does not influence the price change as much.