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Liquidity (or market depth) of Forex


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Liquidity (or market depth) of Forex

  #11 (permalink)
 Dorky 
Pahang Malaysia
 
Posts: 33 since Jul 2015


Thxo View Post
You can see the details (and other numbers) here ...

Bank for International Settlements


Thank you very much for the PDF attachments.

5+ trillions a day is large indeed, but there is something that still bugs me.

They say that if a market has thicker liquidity, it would be less volatile than a market that has thinner liquidity.

So why is the forex market remain so volatile (with lots of whipsaws, reversals, gaps, and sharp sudden moves)?

Isn't it supposed to have lower volatility?

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  #12 (permalink)
Thxo
West Java
 
Posts: 145 since Apr 2014
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Dorky View Post
Thank you very much for the PDF attachments.

5+ trillions a day is large indeed, but there is something that still bugs me.

They say that if a market has thicker liquidity, it would be less volatile than a market that has thinner liquidity.

So why is the forex market remain so volatile (with lots of whipsaws, reversals, gaps, and sharp sudden moves)?

Isn't it supposed to have lower volatility?

I'm not dabbling into the mechanics too deep, so i can't give you a good theory for that .. maybe others can,
if what you mean is E/U volatility for past few months (will be over soon anyway ), given the fundamental factors behind it, i can only think that's pretty normal to happen.


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