How to Trade Forex During the Holidays - Part 2 | Vantage FX UK
- 11 years ago
Vantage FX (http://www.vantagefx.co.uk) look at what Forex traders should look out for during quieter periods in the holidays.
Illiquid (Less-Liquid) Market
The more liquid a currency pair, the more market participants fighting for a price; so a move in the price is less likely to be as quick or on as large a scale than in a market where there are few participants. In the case of an illiquid market, any move can be quite aggressive and drastic.
In this video, we look at a EUR/AUD chart, trading in a flat range with not too much price movement. Once the market broke previous highs, the momentum and lack of liquidity has meant that the price showed a 300 point movement,
A trading strategy could have allowed you to trade the range as well as working orders either side of the range, which would have given you access to that strong break that occurred. You should be aware that a break in price against you can also occur, so it is always advisable for traders to cover movements on either side using suitable risk tools.
Illiquid (Less-Liquid) Market
The more liquid a currency pair, the more market participants fighting for a price; so a move in the price is less likely to be as quick or on as large a scale than in a market where there are few participants. In the case of an illiquid market, any move can be quite aggressive and drastic.
In this video, we look at a EUR/AUD chart, trading in a flat range with not too much price movement. Once the market broke previous highs, the momentum and lack of liquidity has meant that the price showed a 300 point movement,
A trading strategy could have allowed you to trade the range as well as working orders either side of the range, which would have given you access to that strong break that occurred. You should be aware that a break in price against you can also occur, so it is always advisable for traders to cover movements on either side using suitable risk tools.