AdvanTrade (liquidity provider): The foreign exchange market is a global trading market, and the huge amount of funds traded every day makes its liquidity one of the key factors in the operation of foreign exchange trading platforms. So, where does the liquidity of the foreign exchange platform come from? This paper will answer this question and introduce the key concepts and participants related to liquidity.

First of all, the liquidity of foreign exchange platforms mainly comes from liquidity providers (LP) and market makers. Liquidity providers are financial institutions or traders, who ensure the liquidity of the market by providing a large number of buying and selling quotations. AdvanTrade said that they are usually large-scale financial institutions with high credibility and rich experience in capital and trading. Market makers are traders who provide liquidity for specific currency pairs, and they generate transactions by quoting prices.

Transactions between these liquidity providers and market makers can be conducted in two ways: one is through spread trading, that is, trading at a fixed spread; The other is trading through the instruction book, that is, trading according to the quantity and price of buying and selling instructions in the market.

AdvanTrade: The foreign exchange platform obtains liquidity from liquidity providers and market makers by establishing cooperative relations with them. These liquidity providers and market makers will provide a large number of quotations to the foreign exchange platform, including buying price and selling price. The foreign exchange platform will show these quotations to traders and let them trade on the platform. Foreign exchange platforms usually obtain quotations from multiple liquidity providers to ensure competitive quotations in the market and provide good liquidity.