There is a lot of speculation in the forex market.
One thing to note about the forex market is that commercial and financial transactions are part of the trading volume. In addition, most currency trading is based on speculation.
Most of the forex trading volume comes from buy and sell transactions based on the short-term price movements of currency pairs.
The trading volume brought about by speculators is estimated to be more than 90%!
The scale of the forex market means that there is excellent liquidity. Liquidity is the amount of buying and selling volume happening at any given time. And in the forex market that is extremely high.
This makes it very easy for anyone to buy and sell currencies.
From the perspective of a trader, liquidity is very important because it determines how easily a price can change over a given time period.
A liquid market environment like forex enables huge trading volumes to happen. And the large trading volumes happen with very little effect on the price, or price action.
While the forex market is relatively very liquid, the market depth could change depending on the currency pair and time of day.
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