When a lot of Canadians join the currency trading scene, a question that usually comes to their mind is what really drives the prices that are reflected on their screens. This system is at the center of this process and it is what we would call interbank liquidity, which is basically the system within which trade between various major banks and financial institutions would be done against one another. In the event a forex broker gains direct access to these liquidity pools it enables the average trader in Canada to enjoy price and trade execution that are very similar to that of institutional traders.
Such access is not only a technical privilege. It offers Canadian traders something much more precious: efficiency and fairness. The trades occur in an easier manner and with fewer spreads and a quicker speed of execution. To such a person, who is attempting to exploit short term movements on the market, these minutiae can be very crucial. Slippage decreases and pricing is more transparent thus the trading environment is less erratic and more reliable.
The availability of interbank liquidity is one of those little-known aspects in the bigger picture of trading, the provision of which can determine the purchasing power of a given strategy even without the knowledge of the trader. The more the liquidity is deep and wide, the lesser the chances that traders will experience delays in executions and pricing anomalies that can negatively affect their bottom line. It may be particularly helpful in times of extreme volatility, when the fastest and most accurate work is crucial.
The fact that a forex broker will provide this much access denotes another thing as well. It indicates that the broker has made a commitment in its infrastructure and relations to deliver a more competitive service. It is a level of commitment which is generally resonant to other aspects like the service to the customers, platform reliability, and other regulations. That is to say, a broker who pays a lot of attention to good liquidity ties will be inclined to take the whole trading experience seriously.
Part-time or casual investors among the Canadians could get an advantage by utilizing this type of access which may not demand institutional funds. It does not matter whether they are being conservative as they manage the risk or whether they are trying some shorter term trades; the experience becomes smoother in case there is no sudden network congestion, and the prices proposed should reflect actual market conditions.
A forex broker which is connected to the liquidity pools of the interbank market can also provide a greater variety of currency pairs at an improved price. This gives the traders in Canada the opportunity to diversify their positions more confidently since they are able to work on proper and competitive market data. It is a key aspect of getting informed and maintaining control of the products by being able to keep up with things in a market that is functioning 24/7.
Finally, access to interbank liquidity is not only a technical specification. It will open the door to more professional and transparent trading. To Canadians who appreciate equity and performance, the ability to be dealing with a brokerage that is connected to such deep liquidities can mean the difference between a decent trade and a good trade. It increases the feeling of belonging to a global market but continues to trade from the comfort of home using tools previously accessible only to big players.
