Liquidity Provider (LP)Back to Glossary
A Liquidity provider is an individual or an institution that creates a market for a financial instrument by offering to both buy and sell it. Liquidity providers make their profit in the bid-ask spread, offering price stability and making trading a smooth affair. They are the ‘middle-man’, the bridge between market participants. When it comes to the Forex market, the term associated with liquidity is Tier 1. That refers to big name investment banks that provide the market for all currency exchange pairings.
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