Liquidity refers to the volume of trades in the market. It is the ability to exchange currencies without really affecting the price of the pair. The more liquid a currency pair is, the less impact buys and sells actions will have on its price.
Vincent Nyagaka is a Professional Trader, Analyst & Author. He has been actively engaged in market analysis for the past 7 years. He has a monthly readership of 100,000+ traders and has taught over 1,000 students since 2014. Vincent is also an experienced instructor and public speaker. Check out Vincent’s Professional Trading Course here.