Forex,Trading,And,Liquidity,De finance, share, loan Forex Trading And Liquidity Demystified
Thankfully, there are now several web sites that are there to help people like you with bad credit to find the fast personal loans that you need. When you have bad credit, the first thing that you should be looking for is a loan company that If your financial problems have reached the point where you do not see a way out and you feel as though you are drowning in debt, your best way out is through declaring bankruptcy. Filing may well allow you to get your finances back on track
Today, we are going to talk about a basic thing that you NEED to understand if you want to achieve long-term success in Forex trading, yet, most people (some of whom already trade live, which is scary), still do not understand this simple concept. Many people believe that if they only could come up with a constantly winnig trading system which can double an account if a few months, they would become the richest man on the planet. This is of course a very naive opinion, which doesnt take liquidity into account at all. It is a commonly believed myth that theres almost unlimited liquidity in the Forex market to satisfy anyones need after all, almost 4 trillion dollars traded daily is an impressive number, which at the first sight truly does suggest that its probably true. Nothing can be further from the truth though! There are three main things you need to realize. First off, this huge figure is a sum of ALL currency pairs, not just the one you need. So even for the most liquid pairs, you need to divide it by at least 4 (and we are talking about major pairs here, if you trade some less liquid pair, you need to divide by 10 or 20). Second, you actually need to get the price at the moment you cant wait an hour or two before your order gets filled, because the price would be completely different. Lets say we need to get filled in 10 seconds at the latest. There are 86,400 seconds in 24 hours, therefore, we need to divide the figure by another 8,640. Third, if you use scalping a system, you need to realize that only about 1% of the liquidity can actually fill the exact price you need the other 99% is available too, but for a worse price, which results in slippage and this can turn a winning scalping system into a losing one. Therefore, we need to divide the figure by another 100. After doing the math, we come to a conclusion that at a moment, for a certain currency pair and for a price we need, there actually isnt $4,000,000,000,000 available, but only slightly above $1,000,000, which equals to 10 standard lots. This is FAR from unlimited liquidity, isnt it? Now when we know were not becoming the richest men on the planet trading Forex, how does one maximize the potential of his or her trading? There are basically two solutions. The first solution is to avoid scalping systems if you use systems that dont turn into losers if the price is a few pips worse, then your system has much bigger potential. However, it is a fact that scalping systems, on the other hand, tend to be more reliable when it comes to predicting the market price. A solution for scalping systems is to use limit orders, as 99% of the time, if you use a limit order, you will get a BETTER price than you ask for (theres always space for negative slippage, however, after more than 12 months of using this method, we have yet to see a trade with negative open slippage).
Forex,Trading,And,Liquidity,De