Liquidity
How easily something can be bought or sold quickly without moving its price much. Liquid markets have tight spreads and deep order books.
A liquid market has many participants willing to trade at prices close to the current quote. That means tight spreads, the ability to trade larger sizes without moving the price much, and generally smoother price action.
The foreign exchange market is the most liquid in the world by turnover. The Bank for International Settlements' Triennial Survey put average daily turnover at about 7.5 trillion dollars in April 2022 and about 9.6 trillion dollars in April 2025.
Liquidity varies
Even in forex, liquidity is uneven:
- By pair: EUR/USD and USD/JPY are far more liquid than exotic pairs.
- By time: it is usually highest during the London session and the London/New York overlap, and thinnest around the daily rollover (around 17:00 New York time), late Friday and on holidays.
- By conditions: in a shock, liquidity providers can pull back, and spreads can widen sharply even in major pairs.
Worked example
Illustratively, at 14:00 London time EUR/USD might show a 0.2-pip spread on a raw account; at 22:05 London time, just after the rollover, the same account might show 1.5 pips or more. A one-lot trade costs 2 dollars of spread in the first case and 15 dollars in the second.
Practical notes
- Thin liquidity increases the chance of slippage and gaps.
- Check typical spreads at the times you trade, not the advertised minimum.
See how the forex market works, why spreads widen and the market hours tool.
Not investment advice. This is general information and education, written without knowledge of your circumstances. It is not a recommendation to buy or sell any instrument. Past performance is not a reliable indicator of future results. Trading leveraged products carries a high risk of losing money. Risk warning