In the world of finance and cryptocurrency trading, it's important to understand how prices are set and how brokers give access to market liquidity. This article explains these key points, starting with how prices are formed and ending with why liquidity matters for successful trading.

Forex prices are shown as a Bid/Ask spread. The spread is the difference between the Bid (the price you can sell at) and the Ask (the price you can buy at). 

Imagine you hear important news that seems like a good time to enter the market. Many other traders think the same and try to enter the market at the same time.

Success in forex trading depends on understanding how prices are made and where brokers get these prices. Knowing this can help you avoid mistakes and ensure you're not being deceived. Let's explore the basics of how prices are set in financial markets.

Brokers and banks are your gateways to the markets. For example, FXTM, a well-known broker, gets prices from reputable banks and institutions. Popular trading platforms like MetaTrader offer competitive prices for trading different assets.

How much will it cost to trade forex?

There’s usually no commission or fees to pay. Brokers are paid through the ‘spread’, which is the difference between the bid and ask prices.

Which currency pairs are traded most in forex?

The most popular currency pair is EUR/USD, followed by USD/JPY, GBP/USD, AUD/USD, USD/CHF, USD/CAD and NZD/USD. These pairs are known as the 'majors.'

Liquidity

Liquidity is how easily you can buy or sell an asset at the market price. Even in the large forex market, liquidity and prices can be limited.

For instance, if a lot of traders want to buy or sell an asset because of big news, market liquidity drops. This can cause the spread to widen, prices to slip, and order execution to be delayed.