Liquidity

### What it really is Liquidity is somebody willing to take the other side, right now, in your size. It has two faces. **Tightness** is the bid-ask spread you pay to cross. **Depth** is how much size is actually resting at that quote before your order starts eating worse and worse prices. A market can look liquid on the spread and still be shallow underneath, which is precisely how an ordinary-sized order fills several pips away from where you clicked. ### Where it comes from It is made by institutions and machines that are awake. The BIS Triennial Survey found OTC foreign exchange turnover of $9.6 trillion per day in April 2025, up 28% from $7.5 trillion three years earlier, with the US dollar on one side of 89.2% of all trades. It also found that turnover is heavily concentrated by centre: the United Kingdom at roughly 38% and the United States at about 19%, with the top four centres accounting for 75% of trading ([BIS](https://www.bis.org/statistics/rpfx25_fx.htm)). That is the mechanical reason behind the definition above. The UK and the US between them book well over half of the world's FX turnover, so the London and New York hours are the hours when the deepest books in the market are actually open. A cross with no dollar leg during the Asian session is the same market with most of its participants asleep. ### When it vanishes The Reserve Bank of Australia's account of the yen flash event on 3 January 2019 is the cleanest case study a retail trader will ever get. At 9:36am AEDT the yen appreciated about 3% against the US dollar in roughly 30 seconds, with no material news. The Australian dollar fell about 3% against the US dollar within two minutes, touching a 10-year low of 0.6715, and around 7% against the yen. Bid-ask spreads went from around 2 pips to 100 to 300 pips. Read the conditions, because they are the lesson: the RBA notes volumes are particularly low between the US close and the Tokyo open, it was the New Year period, and Japan was on a bank holiday. It also notes that some algorithmic platforms which supply liquidity in normal conditions are programmed to switch themselves off in unusual ones, pulling the bid away at the exact moment it is needed. Prices recovered within a few minutes. Spreads took about an hour ([RBA](https://www.rba.gov.au/publications/smp/2019/feb/box-b-the-recent-japanese-yen-flash-event.html)). So the honest way to hold it: **your stop is not a price, it is a request.** Liquidity decides where it actually fills, and the gap between the two is slippage. Holidays, the daily rollover and the minutes around scheduled data are structurally hostile even when the chart in front of you looks identical to any other hour. ### The second meaning In our system, liquidity also names the resting stop orders themselves: buy stops above the highs (buy-side liquidity), sell stops below the lows (sell-side liquidity). The two senses are not a coincidence of vocabulary, they are the same idea from opposite ends. Liquidity is wherever the orders are. You need it there to get out cleanly. Someone larger wants it there for the opposite reason.