What is liquidity and what is its significance?
Liquidity refers to the availability of a product and ensures market participants have the ability to buy and sell easily.
A liquid market increases the likelihood for finding a counterparty when entering or exiting a trade.
What is volume a measurement of in trading?
Volume in trading refers to the total number of contracts exchanged between buyers and sellers of a market during trading hours over a given period.
Higher trading volumes are considered more positive than lower trading volumes because they indicate the availability of orders in the market allowing better order execution during the trading session.
What is open interest in the derivatives market?
Open interest is the total number of outstanding derivative contracts, such as options or futures that have not been settled for an asset.
Open interest equals the total number of bought or sold contracts, not the total of both added together. Increasing open interest represents new or additional money coming into the market while decreasing open interest indicates money flowing out of the market.
Risks and opportunities for corporates and individual investors – Position and risk management
Risk management is the responsibility of market participants designed to limit risk exposures that specifically applies to the participants financial profile in the market.
The financial profile of a participant may include their role in the financial market or the amount of capital under their responsibility to be managed in the market, and therefore the risk variables that each would need to identify may be unique.
For both corporate and individual investors, the market to trade would be a key variable to clearly state and support with reasons for trading or investing. Reasons for selecting one market over another could include price volatility, liquidity, daily volume traded, size of the minimum price increment, and value of the minimum price increment. Comparing these variables between markets will help decide the suitability and/or risk of each.
For example, if bitcoin (BTC) moves around 1,000 points per day and each point is worth $1, a trader might experience a $1,000 fluctuation in their account balance for one day. Another example is the U.S Dollar / Singapore Dollar (USDSGD), which could move 70 pips or more per day and trading a standard lot size with each pip worth $10, a $700 fluctuation could be expected for one day.
Market participants may also manage their risk through the size of their positions. The larger their position size, the greater is their exposure and the smaller their position size their exposure is lower. Investors should determine the risk that would result from various position sizes and select the size that ensures that their risk limit is not exceeded.
Finally, setting stops with a specified loss amount provides protection if the market does not move in the desired direction. It helps to prevent creating a loss scenario which is larger than an account can handle.
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Editors’ Picks
EUR/USD eases from around 1.1800 after US GDP figures
The US Dollar is finding some near-term demand after the release of the US Q3 GDP. According to the report, the economy expanded at an annualized rate of 4.3% in the three months to September, well above the 3.3% forecast by market analysts.
GBP/USD retreats below 1.3500 on modest USD recovery
GBP/USD retreats from session highs and trades slightly below 1.3500 in the second half of the day on Tuesday. The US Dollar stages a rebound following the better-than-expected Q3 growth data, limiting the pair's upside ahead of the Christmas break.
USD/JPY stays deep in the red below 156.00 on intervention risks
USD/JPY stays deep in the red below 156.00 in the Asian session on Wednesday. The US Dollar weakens despite the stronger-than-expected US Q3 Gross Domestic Product report, while the Japanese Yen capitalizes on looming risks of a forex market intervention by local authorities.
Editors’ Picks
Gold: Record rally sustains near $4,500 on safe-haven flows
Gold sustains the record-setting rally near $4,500 in the Asian session on Wednesday. The Israel-Iran conflict and the escalating US-Venezuela tensions boost safe-haven flows into Gold. Furthermore, US Q3 GDP data fails to lift the US Dollar amid growing bets for two Fed rate cuts in 2026, underpinning the non-yielding bullion.
AUD/USD: Buyers recapture 0.6700 on extended USD weakness
AUD/USD is holding higher ground above 0.6700 in Wednesday's Asian trading as the US Dollar falls across the board. The Australian Dollar is catching a fresh bullish bid as the Reserve Bank of Australia faces down future interest rate hikes in 2026, while the Federal Reserve is expected to get caught in a long-run rate-cutting cycle, depressing Greenback market flows.
USD/JPY stays deep in the red below 156.00 on intervention risks
USD/JPY stays deep in the red below 156.00 in the Asian session on Wednesday. The US Dollar weakens despite the stronger-than-expected US Q3 Gross Domestic Product report, while the Japanese Yen capitalizes on looming risks of a forex market intervention by local authorities.
The crypto market is preparing us for a deeper global sell-off
The crypto market capitalisation fell by 1.4% to $2.97T, falling below the $3T mark once again. The market was unable to repeat the robust rebound from the local bottom, as it did after 23 November and 2 December, indicating increased pressure from sellers.
Ten questions that matter going into 2026
2026 may be less about a neat “base case” and more about a regime shift—the market can reprice what matters most (growth, inflation, fiscal, geopolitics, concentration). The biggest trap is false comfort: the same trades can look defensive… right up until they become crowded.
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Top 10 Chart Patterns Every Trader Should Know
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7 Ways to Avoid Forex Scams
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What Are the 10 Fatal Mistakes Traders Make
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The challenge: Timing the market and trader psychology
Successful trading often comes down to timing – entering and exiting trades at the right moments. Yet timing the market is notoriously difficult, largely because human psychology can derail even the best plans. Two powerful emotions in particular – fear and greed – tend to drive trading decisions off course.