Liquidity And Efficiency
When there are a lot of buyers and a lot of sellers, you can expect to buy or
sell at a price that is very close to the last market price. The currency market
is the most liquid market in the world. Trading volume in the currency markets
can be between 50 and 100 times larger than the New York Stock Exchange (Source:
Oanda.)
When you are trading stocks, you may have experienced events where one piece
of news accelerates or decelerates the price of the underlying stock you may
have bought into. Perhaps a director has been kicked out by the shareholders of
a company or the company has just released a new product and big investors are
buying the shares of a particular company. Share prices can be drastically
affected by the actions or inactions of one or a few individuals. So if you are
relying on television reports and newspapers to get your news, most of the
opportunities or warnings will have come too late for you to take advantage by
the time you get them.
