Liquidity Providers are entities or institutions that supply the market with liquidity, meaning they make it easier to buy or sell assets without causing significant price changes. They ensure there’s enough volume of assets available so trades can happen smoothly and quickly.
More details:
- In financial markets (like stocks, forex, or cryptocurrencies), liquidity providers often include banks, market makers, or large financial firms.
- They place buy and sell orders on exchanges or trading platforms to maintain active markets.
- By doing so, they reduce the bid-ask spread, which is the difference between the buying price and selling price, making trading more efficient and less costly.
- For example, in forex trading, liquidity providers are usually big banks or financial institutions that offer currency prices to brokers and traders.
Financial companies without liquidity providers become scammers by using large price fluctuations to cause clients to incur losses.
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