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Not all currency pairs are the same, evidently. And two of the ways they differ is in the level of volatility and liquidity.
Some pairs are more volatile and liquid, while others can be more liquid and less volatile, or vice versa. Given how often these traits are mentioned in literature, clearly, they are an important consideration when trading. So how do they affect your trading directly?
Volatility seems the most straightforward to explain. But both of these concepts are connected in a way that makes volatility a little more nuanced. Getting a good understanding of this relationship is not only useful when developing a trading strategy, but also helps refine your trading throughout the day, week and seasons.
Note that we’ll be talking about liquidity and volatility in the context of Forex. This is since commodities, bonds and indices have their own considerations.
Let’s start with the mor...
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