Liquidity
The ease with which a currency pair can be bought or sold without significantly affecting its price, reflected in tight spreads and fast execution.
What is Liquidity?
Liquidity refers to how easily you can enter or exit trades without moving the price. High liquidity means:
- Tight spreads
- Fast order execution
- Minimal slippage
- Large position sizes possible
Liquidity by Pair
| Liquidity Level | Examples | Typical Spread |
|---|---|---|
| Very High | EUR/USD, USD/JPY | 0.1-0.5 pips |
| High | GBP/USD, USD/CHF | 0.5-1.5 pips |
| Medium | EUR/GBP, AUD/USD | 1.0-2.0 pips |
| Lower | Exotic pairs | 3.0-10+ pips |
When Liquidity Changes
Liquidity varies by:
- Time of day: Highest during London/NY overlap
- Day of week: Lower on Mondays and Fridays
- News events: Can drop sharply before major releases
- Holidays: Much lower, avoid trading
Why Liquidity Matters
For traders:
- Lower trading costs
- Better price fills
- Easier to exit positions
- More reliable technical analysis
Major pairs offer the best liquidity. Check our Currency Strength Meter to analyze major currency performance.