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A decisive risk-off movement swept through financial markets on Thursday, as developments in the Middle East pushed crude oil prices back into three-figure territory. The US military has concluded its 13th consecutive night of strikes against the Iranian regime; neighbouring countries have reported retaliatory missile and drone attacks originating from Iran; Yemen’s Houthi rebels have targeted Saudi ships in the Red Sea and fears continue to grow that the attacks may escalate to a wider regional conflict. The Persian Gulf being closed off is bad enough for global trade, but if the Red Sea follows suit, then the world will have lost not one but two vital shipping lanes. Oil markets were certainly shaken, as the Brent Crude benchmark pushed north of $100 for the first time in two months after rising 6% on Thursday, while US oil contracts jumped to $93 per barrel. Meanwhile, in Abu Dhabi, Murban Crude futures exploded higher yesterday, briefly reaching $114 per barrel before settling lower at $108, nevertheless a 20% daily rise for the local benchmark. The surge in oil prices has spooked markets into more defensive positions as the threat of inflation rears its ugly head once again. Capital flowed away from riskier assets and back into the safe hands of the US dollar, pushing the DXY as high as 101.5 on Thursday. Precious metals suffered, with gold falling 2% and retreating back to $4,050 per ounce, while silver sank back down to the $57 range after shaving more than 3% from its tally. Bitcoin likewise succumbed to the fear, enduring a $1,000 haircut to slump back to $65,000 per coin, dragging the broader crypto markets down with it. US stocks were also hit hard, but more on that later. The fact of the day in currencies is that the Japanese yen has officially hit a 40-year low against the dollar, with the pair peaking as high as 164 during yesterday’s session. The move has prompted all the usual questions as to when the Bank of Japan will intervene to defend its currency, but the fact is that the central bank has already done so multiple times over the last four years and has failed to achieve anything other than a fleeting respite to the seemingly inevitable decline. The US Treasury said much of the same, claiming that the only answer was for the BoJ to hike rates on the yen, thereby narrowing the interest rate differential even further and limiting the undesirable volatility that has plagued the pair since 2021. Tesla and Google both reported quarterly earnings after the bell on Wednesday, and shares in both companies shot down the following day. While Google managed to beat estimates, with cloud revenue increasing 82% year-over-year and overall revenue growing by 24%, investors were concerned about the company’s plans to increase capital expenditures this year and the next. It was much the same problem over at Tesla, which is expected to burn $25 billion in capex this year, while the beleaguered car manufacturer also had to justify the additional misfortune of falling short of revenue estimates. Shares in Alphabet (GOOG) fell 7% on Thursday, which was only half the drop incurred by Tesla (TSLA), which plummeted 14.5% over the same time frame, bringing the stock down to a miserable 29% year-to-date loss. Markets are not happy about the colossal amounts of money being thrown at AI infrastructure and Wall Street is becoming less keen on dishing out blank cheques to companies with even the flimsiest of artificial intelligence aspirations. Investors are starting to ask uncomfortable questions regarding return on investment, and so far, many of the big names have not been able to provide satisfactory answers. The worrying earnings reports triggered a wider selloff in the Magnificent Seven, each component of which performed dismally yesterday, dragging the Nasdaq 100 (NDX) down 1.9% when all was said and done. The Nikkei appears to have latched on to the negative momentum this morning, falling 3% within the first hour of the opening bell in Tokyo. Potentially rough day ahead for big tech. #OIL #TSLA #GOOG About the Author Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS. Reviewed by RADEX MARKETS Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment.

Markets collectively decided that the selloff in semiconductors had gone on for long enough earlier this week, as dip buyers stepped up to the mark on Monday, killing the downward momentum that has plagued the sector since the end of June. Buy side pressure overwhelmed the books completely the following day, pushing a number of companies to double-digit gains – companies that had been on the other side of the equation just days prior. SanDisk (SNDK) and SK Hynix (SKHY) both surged 14% on Tuesday; Micron (MU) and Western Digital (WDC) were not far behind with 12% rises of their own; Seagate (STX) gained 11%, while AMD and Intel (INTC) both closed yesterday’s session 8% higher. The euphoria spread to Asian markets early this morning, pushing SK Hynix on the South Korean stock market to a 9% rally and lifting the wider Kospi index 5.5% higher within the first hour of the opening bell. Over in Japan, the Nikkei 225 showed a little more restraint, but nevertheless rapidly added 2% to its tally as trading got underway. How long the rally will last is anyone’s guess, but for the time being semiconductors, and particularly memory stocks, are back on the menu. The broad move higher comes ahead of major earnings reports this week and the next, including Alphabet (GOOG) and Tesla (TSLA) later today. Both companies will undoubtedly provide updates on their latest AI ambitions and new infrastructure requirements, which will send a clear message to chipmakers about what to expect in terms of demand over the coming months. If the major tech companies continue to push for larger data centres and greater computing power, the long-term outlook for semiconductors will be confidently reinforced. Cryptocurrencies may be undergoing a momentum shift of their own. Yesterday, Bitcoin closed at its highest level since early June at $66,500 per coin. The wider crypto sphere is likewise attempting to halt its endless slide into irrelevancy which has dominated the industry since the October 2025 peak. While risk appetite has returned somewhat this week, lifting precious metals by the same token, cryptocurrencies can point to a number of specific reasons as to why the field can afford to be cautiously optimistic. The first is that Treasury Secretary Scott Bessent told viewers in an interview on Tuesday that the Clarity Act was “on the 1-yard line” to pass through the US Senate. The bold claim was received with open arms by the crypto space as a whole, including companies such as Coinbase (COIN) and Circle (CRCL), which rose 9.6% and 8.6% respectively upon hearing the news. Furthermore, BlackRock CEO Larry Fink made some very interesting comments last week, stating that the crypto markets had been carrying far too much leverage, which has now been washed out, leaving cryptocurrencies in a more stable position than the one previously occupied. Other commenters have said much the same; the catastrophic fallout from last October’s record high was indeed a result of too much leverage, but according to Coinglass and other sources, much of this leverage has since been removed from the market. Institutional flows are also cause for jubilation. Bitcoin ETFs suffered horrendous outflows in June, but the trend abruptly reversed last week, which saw over $700 million in inflows instead. Crypto bros could do with some good luck after the past ten months of dismal price action. #SOXX #BTC #GOOG About the Author Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS. Reviewed by RADEX MARKETS Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment.

Buy side liquidity is the pool of buy orders resting above obvious highs on a chart: short sellers' stop-losses plus breakout entries. Sell side liquidity is the mirror image: sell orders resting below obvious lows. Ever wondered why price so often stretches just past a clean high or low before turning? These two pools are the answer. And if you have ever been stopped out by a wick that reversed a second later, you have already met them; you just hadn't been introduced. Quick word before we start: this is a chart-reading concept, and it has nothing to do with the "buy side vs sell side" of the finance industry, where the terms describe funds and brokers. In this guide I'll cover what each pool is, exactly where both sit, how to identify them on your own charts, and how traders actually put them to work: the strategies, a step-by-step routine, the psychology that keeps the pools forming, and the habits that cost traders the most money at these levels. Buy side liquidity is the cluster of buy orders sitting above visible highs; sell side liquidity is the mirror cluster of sell orders below visible lows. Price is often drawn to these pools, so knowing where they sit helps you anticipate which levels the market may reach for before it turns. Ready to mark these levels on a live chart? Buy side and sell side liquidity are the two pools of resting orders the market gravitates towards. Why there and not somewhere else? Stops protecting short positions live above old highs; stops protecting long positions live below old lows; and breakout traders park their entry orders at the very same levels. That double stack of stops plus entries is what turns an ordinary high or low into a magnet (and yes, the stop you tucked two pips past the high counts too). A liquidity pool is a price area where a large number of pending orders sit waiting to be filled. The bigger and more visible the pool, the more likely price is to reach for it. The vocabulary comes from a school of chart analysis called Smart Money Concepts, spread widely through ICT-style teaching. Strip away the jargon and the idea is old and simple: orders cluster where everyone can see the same level, and the market visits the places where orders live. For me that plain version was worth more than a year of indicator tweaking: once I accepted that my own stop is just another resting order sitting in someone's pool, the whole concept clicked. Buy side liquidity is the pool of buy orders resting above obvious highs — stops on short positions plus breakout buy orders. Two groups build it: traders who are short and must buy to exit if price rises, and traders waiting to buy a confirmed break higher. A dense pocket of guaranteed buyers is exactly where sell-heavy positions get filled, which is why price is drawn there. A BSL pocket only marks where those resting orders sit; what price does after they are filled is a separate question. Sell side liquidity is the pool of sell orders resting below obvious lows — stops on long positions plus breakout sell orders. Longs who must sell to exit build one half of it; traders waiting to sell a confirmed break lower build the other. The market reaches down for this pocket just as readily as it reaches up for BSL, and for the same reason: guaranteed counterparties. The mechanism is identical — the difference is location and what a raid on each side implies. When sell side liquidity below a low is taken and price snaps back above it, the sell orders below have been filled and bias tilts bullish. When buy side liquidity above a high is taken and price snaps back below it, the buy orders above have been filled and bias tilts bearish. In my experience the sell side raid is the one that catches retail traders hardest: more beginners hold longs than shorts, so the heavier crowd of stops tends to pile up under the lows, and that is where I have seen the most painful wicks. One nuance keeps this table useful: the bias reading only counts when price closes back inside the range. A breakout that holds beyond the level is the market actually leaving. When a liquidity pool is taken, the resting orders get filled in one burst: price spikes through the level, and whether it then holds beyond or snaps back tells you if you watched a breakout or a raid. The reason this keeps happening is mechanical. Large positions cannot be filled without someone on the other side of the trade, and a stacked pool of stops is the one place the other side is guaranteed to show up. So price "reaches for" these levels because that is where the volume lives — mechanics, not conspiracy. It matters to you for an uncomfortable reason: your stop is part of someone's fill. The first time I saw my own exit price print as the low of the day, I stopped taking raids personally and started keeping notes on where I had parked the stop instead. Picture GBP/USD with an obvious high at 1.2764. Price pushes up, spikes to 1.2771, fills the buy orders parked above the high, then closes the candle back below 1.2764. The pool above the high has been taken, the resting buy orders have been filled, and the bias for the next move tilts bearish. A liquidity raid is a fast push through an obvious high or low that fills the orders resting there and then returns inside the old range. Traders also call it a sweep or a stop run, depending on the school. Read more: Liquidity Grab Guide: Definition, Signals & Trading Techniques The pools form on their own: every stop and pending order left on the chart adds to one, and the more obvious the level, the more orders pile onto it. So identification is simply marking the levels where the crowd's orders must be, above price for buy side, below price for sell side. My own pre-London routine is exactly this: mark yesterday's high and low, circle any equal highs or lows, note the nearest round number. Five minutes on a live chart with a broker such as RADEX MARKETS, and the session's map is set. Four kinds of level do most of the work. The previous day's and week's highs and lows are the most-watched lines on any chart, which makes them the most reliable pools (everyone watches them, and that is precisely the point). Stops and breakout orders stack just beyond them: buy side liquidity above the highs, sell side liquidity below the lows. In my experience yesterday's high and low produce more clean raids than every other level combined, so they are the first two lines I draw each morning. If you mark nothing else, mark these. Equal highs and equal lows are two or more touches at nearly the same price. The crowd reads the double touch as proof the level will hold, so stops stack right behind it, and that stack of stops is exactly what makes the level a target. The cleaner the equal levels look, the bigger the pool sitting behind them. My own trade journal is blunt about this: the prettier a set of equal lows looked to me, the more often the third touch swept them before the real bounce came. Equal highs (EQH) are two or more swing highs printed at almost the same price; equal lows (EQL) are the mirror at the bottom. Both act as visible reference points where the crowd parks stops, which is why they attract raids. Round numbers pull in orders for no deeper reason than human habit, and the effect is measurable: a Federal Reserve Bank of New York study of a major dealing bank's order book found that almost 10% of stop-loss and take-profit orders were placed at rates ending in 00, such as 1.4300 (Osler, Stop-Loss Orders and Price Cascades in Currency Markets). Session extremes behave the same way: the Asia-session high and low are often the first pools the market reaches for when London opens. Both can hold either pool — above current price they are BSL, below it SSL. I have stopped fighting the habit myself; my take-profit orders still drift towards the round figure, so I assume everyone else's do too and treat every 00 level as a small pool by default. A pool being tapped leaves a signature: a long wick punching through the level, a quick close back inside the range, and often a burst of tick volume as the resting orders fill. Recognising that signature is the identification skill; deciding what to do about it is the next section. The table below compresses all of it into one reference you can keep beside your charts. Read more: What is liquidity in Forex and how is it measured Traders use buy side and sell side liquidity in two directions: fading a raid after price snaps back inside the range, or riding a genuine breakout once the pool has been cleared. In both cases the pools do the same job — they define where entries make sense, where stops belong, and where targets are waiting. This is where the levels you marked turn into trade decisions. Fading the raid means waiting for a pool to be taken and for price to close back inside the range, then trading back towards the opposite side. You saw the spike, you saw the failure, and now you trade the failure. The snap-back close is my entry condition; until it prints, there is no trade to take, because during the spike itself you have no evidence of which outcome you are in. The cost of this strategy is simple: some raids keep running, and those losses are what you pay for taking the pattern. Read more: Liquidity Sweep: How It Works and How to Trade It Trading the real breakout means joining the move only after a cleared level holds on the retest. Once a pool is swept and price stays beyond it, the orders that were resting there have been filled, so fewer resting orders remain to stall the move. Enter on the retest rather than the first candle through. In my first month with this pattern I skipped the retest, bought first candles, and lost the difference; the rule exists because I needed it. You will often be late by design, and that lateness is what confirms you are in a breakout rather than a raid. Placing stops beyond the pools means parking your exit past the wick zone of the nearest pool instead of inside it, where it would sit with everyone else's stops. Suppose you are long EUR/USD from 1.0871 with equal lows sitting at 1.0843. A stop 2 pips under the lows at 1.0841 lives inside the pool; a stop 14 pips beyond it at 1.0829 survives the typical sweep. A wider stop means a smaller position for the same risk, and in my view it is the single most worthwhile trade-off in this whole article. Most traders who complain about stop hunts are really complaining about where they parked the stop. Targeting the opposite pool means using the far pool as your take-profit level: a long entered after an SSL raid aims at the buy side liquidity above, and a short entered after a BSL raid aims at the sell side liquidity below. When the distance is large, taking partial profit at the nearer pool keeps the trade calm; on a quiet session the nearer pool is often all you get, and my view is you take it and say thank you. Neither pool is guaranteed to be reached, so treat targets as probabilities. Everything above compresses into a routine you can repeat every session, and the routine does not change whether it is a sleepy Tuesday or an NFP Friday: Step 6 changed my own results more than any entry technique. Moving stops from 2–3 pips under an equal low to 12–15 pips beyond the wick zone roughly halved how often I was clipped before the move I actually wanted. The entries stayed the same; only the parking spot changed. Liquidity pools exist because of how people think, which is why they refuse to disappear no matter how many articles are written about them. Stops cluster at obvious levels because everyone anchors to the same reference points: the same high, the same double top, the same round number. A level feels protective precisely because it is visible, and visibility is what fills the pool. The collectively obvious spot becomes, collectively, the least safe spot on the chart. I know the trap and I still feel the pull to hide my stop "just under the low" every single time; the instinct never switches off, I just override it with the routine. Big players hunt liquidity pools because they need volume, and a stacked pool is the only place a guaranteed counterparty exists. Nobody is chasing your fifty-dollar stop; an institution filling a large position simply has to trade where the orders are, and the orders are behind the obvious levels. Reading raids as order-filling keeps you analytical. Reading them as persecution turns every loss into a story about being cheated, and stories like that cost money. A stop hunt is a move that pushes price into a cluster of stop-loss orders, triggers them, and then reverses. The name suggests intent, but in liquid markets the effect usually comes from large players filling positions where the resting orders sit. The pools keep refilling because of an emotional loop. FOMO places breakout buy orders above the high and adds to the buy side pool; fear places stops just under the obvious low and adds to the sell side pool. I have made this exact mistake myself: I once bought the first spike through a London-morning high, 9 pips above the level, and watched the raid finish four minutes later with my position 23 pips underwater before the real move started — without me. The market did not trick me; I chose that entry. Most liquidity losses come from a short list of repeatable habits. Each one below tells you what it causes, with an example of how it plays out: Every habit on this list has a mirror fix in the step-by-step routine above. I have committed all five at some point, which is exactly why the fixes are written as a checklist rather than as advice. None of them needs new knowledge, only the discipline to use what you already marked on the chart. Buy side liquidity is the pool of buy orders resting above obvious highs on a chart: stop-losses protecting short positions plus breakout buy orders. Price is often drawn towards these clusters because they guarantee willing buyers at that level. Sell side liquidity is the pool of sell orders resting below obvious lows: stop-losses protecting long positions plus breakout sell orders. It is the mirror image of buy side liquidity, sitting on the underside of the chart. The buy orders above the high get filled in one burst and price spikes through the level. If price then closes back below the high, the move reads as a raid with a bearish tilt; if it holds above, it reads as a genuine breakout. Mark the levels where resting orders visibly cluster: previous day and week highs and lows, equal highs and equal lows, round numbers, and session extremes. Zones above current price hold buy side liquidity; zones below hold sell side liquidity. In ICT and Smart Money Concepts vocabulary, liquidity means the clusters of resting orders, mostly stop-losses, that the market seeks out, split into buy side liquidity above highs and sell side liquidity below lows. A liquidity sweep is a fast run through a liquidity pool that fills the resting orders and then snaps back inside the range. It is one of the clearest signs that a level was raided rather than genuinely broken. Traders fade a raid after price snaps back inside the range, join a breakout once the cleared level holds on the retest, keep their stops beyond the obvious pools rather than inside them, and use the opposite pool as a natural target. Buy side and sell side liquidity are simply the two big clusters of resting orders: buys stacked above the highs, sells stacked below the lows. Once you know where the pools sit, the spikes that used to look random start to carry information: which side was taken, whether price snapped back or held, and what that says about the next move. The working rules are short. Mark the pools before you enter. Read raids and breakouts by the close, not the spike. Keep your own stop out of the crowd's pool. Aim at the opposite side and accept partials on the way. When you are ready to go deeper, the liquidity sweep and liquidity grab guides below pick up exactly where this one stops. After enough sessions watching these levels, my conclusion is a plain one: marking the pools does not tell you where price will go next; it tells you where the crowd's stop and entry orders are waiting. The real information arrives after those orders are filled: a close back inside the range points to a reversal, a hold beyond the level points to a genuine breakout, and everything before that close is movement you do not have to trade. The RADEX MARKETS editorial team consists of seasoned financial professionals and market observers. Dedicated to delivering objective market summaries, macroeconomic insights, and educational content, the team strives to keep traders well-informed in a fast-paced financial environment. Reviewed by RADEX MARKETS Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment. Deeper into liquidity: Related concepts:

The US blockade of Iran has been reinstated. The global shipping chokepoint that is the Strait of Hormuz has been put under extreme pressure since hostilities began back in March, and as of the 14th of July 2026, the United States has once again restricted all naval traffic to and from Iranian ports. Naval blockades are certainly nothing new, in fact such military tactics emerged very quickly after the first war galleys splashed into Mediterranean waters in the early bronze age, thousands of years ago. Blockades have remained an effective tool of war ever since, spanning many civilisations and many technological eras. But just how effective were such measures in terms of economic reach and overall results? Time for a journey into the past. The Peloponnesian war was a prolonged conflict for control of Ancient Greece. It pitted a collection of states led by Athens against an alliance of territories led by Sparta. To begin with, Athens was the dominant naval power, whereas Sparta was the major force on land. Given Greek geography, this initially gave the upper hand to the Athenians, who would wield their unrivalled sea power to protect their own trade routes, while raiding and blockading allied Spartan ports, causing economic pressure and even starvation among their enemies. The mighty trireme ruled the waves during this period, an oar-powered galley manned by hundreds of rowers and mounted with a bronze ram at the bow. The vessel was famous for its manoeuvrability and short bursts of speed that could cripple rival ships. It was the battleship of its age and for centuries would strike fear in the hearts of ancient peoples. As time progressed, Sparta became more effective at naval warfare and would eventually gain the upper hand on the Aegean Sea. The decisive moment occurred when Spartan forces outmanoeuvred the Athenian fleet at the battle of Aegospotami, during which 170 enemy ships were captured or destroyed. With the rival navy scattered to the wind, Sparta was in a position to launch a blockade of Athens itself, controlling the sea on one side and occupying the surrounding lands on the other. The city-state was cut off. Food supplies dwindled. Famine quickly followed. Presented with the choice between starvation and surrender, Athens chose the latter, concluding the final chapter of the war. Athens lost the war because it was completely reliant on naval shipments of food. As soon as this lifeline was severed, the city state was doomed. Food stores shrank with every passing week, rapidly cornering the leadership of the nation into an untenable position. Starvation is the ultimate expression of economic warfare, making blockades a ruthlessly effective strategy. The naval blockade of Athens was the first well-known example of such; it would not be the last. While the thousand-year rivalry between England and France has waxed and waned over the centuries, the Napoleonic era was arguably one of the more hostile periods between the two competing powers. In 1803, Britain declared war on France in response to Napoleon Bonaparte’s aggressive territory expansions throughout Europe. Comparisons with the Peloponnesian war are somewhat justified here, with France being the uncontested continental power and Britain being the unrivalled master of the seas. On the very first day of the war, the Royal Navy deployed hundreds of warships to surround French ports, preventing the French Navy from mustering a coherent force of its own. Three years later, in 1806, the military blockade would evolve into a full containment of France’s northern coast, extending all the way to Germany. This effectively criminalised all trade along one of the busiest commercial shipping lanes in Europe, forcing Napolean to enact measures of economic warfare of his own. The response from the French Empire was the Continental Blockade, which severed all connections between Britain and continental Europe. The blockade banned British imports and even forbade all forms of correspondence with the British Empire. The system was designed to establish French industrial and commercial supremacy in Europe, from which Britain would be entirely isolated. The Continental System backfired spectacularly. Although the measures reduced British exports to Europe by half, Britain adapted by turning its gaze further afield, expanding its trade relations to the far corners of the world. Unfortunately for Napoleon, the French economy would not weather the storm so eloquently. The lack of trade with Britain destroyed French port cities; the shipbuilding and ropemaking industries collapsed; the lack of raw materials dealt a huge blow to textiles and sugar refining, while the French state itself suffered massive losses in missing customs revenue due to the lack of trade. Adding insult to injury, because the British Empire still had control of the world’s shipping lanes, smuggled goods often ended up in France anyway, via unofficial, untaxable pathways. The system would also strain the economies of France’s allies. Portugal and Russia suffered so badly under the Continental Blockade that both countries would eventually refuse to obey the terms therein. Napoleon deployed his armies to quell the dissent, dragging hundreds of thousands of troops into the Iberian Peninsula in 1808, before embarking on the utterly catastrophic invasion of Russia in 1812. The latter defeat ultimately led to Bonaparte’s abdication in 1814, marking the end of the Napoleonic era. The purpose of the blockade was clear, but France lost the war because it lacked the means to properly enforce such an undertaking and suffered irrecoverable losses in trying to do so. The fall of Napoleon would usher in a century of peace on the European continent, but the engines of war would reignite soon enough. Blockades would play a defining role in the First and Second World Wars, employed liberally by all belligerents to economically and militarily stifle their opponents over the course of both conflicts. The allied blockade of Germany during the First World War would see German exports decline by 60%, causing daily civilian food intake to drop from around 3,000 calories in 1914 to just 1,200 calories by the end of the war. Supplies of fertiliser and raw materials were also cut off, affecting crop yields and forcing the German military to salvage metal from public and private infrastructure alike. The response was just as devastating. During the same period, German U-boats sank over 5,000 allied and neutral vessels, resulting in the loss of 12 million tonnes of cargo. A third of the world’s merchant ships were destroyed over the course of the war, almost severing Britain’s food supplies entirely and forcing the British government to borrow heavily from the United States. Incidentally, this borrowing would irreversibly shift the financial balance of power away from the British Empire and towards the new continent. The reason New York occupies such a major role in today’s financial world is in part due to the economic circumstances that arose as a result of the First World War. Blockades would be deployed just as mercilessly two decades later. Just as it did against Napoleon the century prior, the Royal Navy launched a blockade of German territories immediately upon the declaration of war. While Germany had prepared for the inevitable move, heavily stockpiling resources before the conflict erupted, the stranglehold would eventually result in fuel shortages that would grind the German military to a halt. Mirroring its previous efforts, the German U-boat fleet would in turn wreak havoc among British shipping lanes, causing food imports to halve over the course of the war. While living conditions within the British Isles undeniably suffered as a result of these actions, the campaign ultimately failed to starve people into submission. On the far side of the world, the same military tactics were being employed in an entirely separate theatre. Following the attack on Pearl Harbour, the United States Navy would orchestrate a clinically effective blockade against Imperial Japan, unleashing unrestricted submarine warfare to cripple the island nation’s merchant fleet, sinking over 1,000 vessels in the process. By the end of the war, imports of petroleum and raw materials had plummeted by over 90%, destroying Japan’s ability to maintain military production. Aircraft were no longer built, warships were starved of fuel, transportation ground to a halt, factories sat idle and food supplies dwindled to dangerously low levels. The blockade is widely regarded as one of the most effective campaigns ever conducted. If trade sanctions are the artillery of economic warfare, then naval blockades are the atomic bomb. Such measures cut down to the bone of supply and demand dynamics, nullifying one side of the equation completely. History has made it abundantly clear that successfully engineering a naval blockade requires nothing short of total command of the sea, as well as an unwavering commitment to see events through to completion, no matter how long that may take. With regard to the ongoing conflict in Iran, nothing has fundamentally changed. When the United States suspended its blockade as part of the short-lasting memorandum of understanding, Iran took the brief window of opportunity to export around 70 million barrels of crude oil. The move significantly weakened one of the blockade’s stated objectives of preventing oil exports from generating revenue for the Iranian regime. The blockade has since been reinstated, but unlike the initial round, it will not be lifted until a comprehensive, permanent treaty has been signed. How long that takes is anyone’s guess. If history is anything to go by, this could take a while. About the Author Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS. Reviewed by RADEX MARKETS Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment.

The United States concluded its eighth consecutive night of strikes over the weekend, targeting Iranian maritime and air defence facilities. Suffice to say that tensions between the two sides are not cooling down. Oil prices are reacting in no uncertain terms this morning, with Brent Crude pushing north of $90 per barrel and WTI rising to $83. With that said, markets at large do not appear to be too flustered as of yet, with gold remaining stable and silver edging higher enough to reclaim $56 per ounce. Bitcoin is not showing much interest in current events either, stabilising under $65,000 per coin as markets begin a new week. US futures are likewise flat as a pancake so far, with sights set on events further afield. The selloff in semiconductor stocks continued deep into last week, but the relentless selling pressure finally began to show signs of petering out by Friday. A number of familiar names initially dropped sharply as the session got underway, but buyers quickly stepped up to the plate to drive prices higher, painting some long wicks along the way. AMD, Nvidia (NVDA), Broadcom (AVGO), Intel (INTC), Micron (MU) and SanDisk (SNDK) all incurred minor to modest losses, but most closed off the session lows, while Western Digital (WDC) and Seagate (STX) broke the trend by closing 2.2% and 5.7% higher respectively. The SOX semiconductor index fund (SOXX) fell another 1.6% on Friday, translating to a 10% loss on the week. The Japanese Nikkei 225, heavily exposed to the semiconductor sector, was down 6.4% by the weekly close, the index’s worst week of the year by far, while the Korean Kospi index had shed the better part of 9% on Thursday evening before closing early for the week. The rotation from chip stocks to the wider tech sector is well illustrated by Apple (AAPL) overtaking Nvidia (NVDA) to become the world’s most valuable company. Japanese markets are closed due to a public holiday today, so traders will have to start the week without the usual barometer for market sentiment, although Korean markets are holding steady so far this morning after opening marginally lower. Too early to tell if the panic is over, and certainly too early to call the bottom on the recent devastation in global semiconductor stocks, which has wiped out over $3 trillion since the end of June. Not much to write home about in this week’s economic calendar. As mentioned above, Japanese markets will remain closed on Monday, limiting liquidity even more than normal this morning. Canadian CPI data will grace the newswires later this afternoon, followed by the UK employment rate and weekly ADP numbers on Tuesday. UK inflation is the sole item on the menu on Wednesday, while Thursday delivers an interest rate decision from the European Central Bank, which is once again expected to hold the deposit rate steady at 2.25%. The meatier releases this week are to be found on the earnings calendar, which delivers both Alphabet (GOOG) and Tesla (TSLA) after market close on Wednesday, followed by Intel (INTC) after the bell on Thursday. The question on everyone’s mind is whether capital will continue to rotate out of semiconductors and into the magnificent seven, which have outperformed convincingly over the past few weeks. #SOXX #IRAN #GOOG About the Author Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS. Reviewed by RADEX MARKETS Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment.

SHARE You click Buy on EUR/USD and, almost instantly, your trade is filled at the price shown on your screen. It feels effortless, but have you ever stopped to wonder who was actually willing to sell those euros to you at that exact moment? The answer is usually a forex liquidity provider. A forex liquidity provider (LP) is a financial institution that continuously buys and sells currencies, making sure there is always enough supply and demand for trades to be executed quickly. Without liquidity providers working quietly behind the scenes, forex trading would be slower, more expensive, and far less reliable. In this guide, I'll explain what a liquidity provider is, what it does, how it differs from a broker and a market maker, the different types of liquidity providers, how brokers work with them, and why they have such a big influence on the spreads and execution you experience every day as a trader. A forex liquidity provider (LP) is a large financial institution, typically a major bank or specialist trading firm, that continuously buys and sells currencies, providing the prices and trading volume needed to keep the forex market moving. Your broker connects to one or more liquidity providers, and the greater the available liquidity, the tighter the spreads and the faster your trades are usually executed. Ready to trade with deep liquidity and competitive execution? A forex liquidity provider is a financial institution or specialist trading firm that continuously stands ready to buy and sell currencies, ensuring trades can be executed without unnecessary delays. In simple terms, a liquidity provider keeps the market moving by making sure there's almost always someone on the other side of your trade. Rather than waiting for another retail trader to take the opposite position, your broker accesses prices supplied by one or more liquidity providers. This allows orders to be filled within milliseconds under normal market conditions, helping to create the smooth trading experience most of us take for granted. Liquidity providers primarily earn money from the spread, the small difference between the bid price (the price buyers are willing to pay) and the ask price (the price sellers are willing to accept). While each individual spread may be tiny, processing an enormous number of trades every day makes this business highly profitable. The forex market handles trillions of dollars' worth of currency transactions every day (BIS Triennial Central Bank Survey), making it the largest financial market in the world. That incredible level of activity only works because liquidity providers are constantly quoting prices, buying from one participant while selling to another. Without them, spreads would widen dramatically, execution would slow down, and price swings would become far more severe. Read more: What is liquidity in Forex and how is it measured Forex liquidity begins at the very top of the financial system: the interbank market. This is where the world's largest banks continuously trade currencies with one another, creating the deepest pool of liquidity available. These Tier-1 institutions constantly quote buy and sell prices across the major currency pairs, forming the foundation of the global forex market. That liquidity is then distributed down through the trading ecosystem: Tier-1 Banks → Liquidity Providers → Brokers → Retail Traders By the time you click Buy or Sell on your trading platform, your broker has already tapped into this wider liquidity network to find a competitive price and execute your trade. This is why, although you'll probably never interact with a liquidity provider directly, its pricing and available volume influence every trade you place. The stronger the liquidity behind your broker, the more efficient your overall trading experience is likely to be. Read more: What Is a Forex Currency Pair and How It Works in Forex A forex liquidity provider supplies the prices and trading volume that allow your orders to be executed almost instantly. Every time you place a trade, a chain of events happens behind the scenes that most traders never see. Here's how it works: For example, if you place a buy order on EUR/USD, your broker looks for the best available ask price from its connected liquidity providers. One of those providers sells the currency to you, allowing your trade to be completed almost immediately. Although the process sounds complex, it happens so quickly that you simply see your order change from Pending to Open in the blink of an eye. Read more: Types of Forex Orders: Master the 7 Types Like a Pro A liquidity provider performs several important functions that help keep the forex market running efficiently. Read more: What is slippage and how to avoid it in trading You'll probably never speak to a liquidity provider or even know which institutions are pricing your trades. However, the quality of your broker's liquidity network quietly influences almost every aspect of your trading experience, from the spreads you pay to the speed at which your orders are filled and how closely your execution matches the price you expected. In other words, the better the liquidity sitting behind your broker, the smoother your trading is likely to feel, even if you never see what's happening behind the scenes. These three terms are often used interchangeably, but they describe different roles within the forex trading ecosystem. Understanding the difference makes it much easier to see what happens after you click Buy or Sell. A liquidity provider (LP) is the broad term for a bank or financial firm that supplies prices and trading volume to the market. It continuously quotes both buying and selling prices, making it possible for trades to be executed quickly. Think of the liquidity provider as the source of the market's available currency inventory. A forex broker is the intermediary between you and the wider market. Rather than creating liquidity itself, a broker provides you with a trading platform and access to one or more liquidity providers that can execute your orders. In simple terms, the broker is the bridge that connects retail traders to institutional liquidity. Read more: About RADEX MARKETS A market maker is a firm that continuously quotes both buy and sell prices while standing ready to take the opposite side of your trade. Some brokers operate as market makers, while many independent firms also perform this role. Because market makers actively provide prices and liquidity, they are considered one type of liquidity provider. Market makers are liquidity providers, but not every liquidity provider is a market maker. Some LPs simply supply liquidity to brokers and institutions without directly dealing with retail traders. It's also worth remembering that the lines aren't always completely separate. A large financial institution can wear more than one hat. For example, a company might provide liquidity to brokers, operate as a market maker in certain markets, and offer brokerage services to institutional clients, all at the same time. For retail traders, however, the distinction is straightforward: your broker gives you access to the market, while liquidity providers supply the prices that make your trades possible. Understanding that relationship helps explain why two brokers can offer noticeably different spreads and execution speeds, even when you're trading the same currency pair. In the forex market, liquidity flows from the top down. A relatively small number of major financial institutions create the deepest pool of liquidity, which is then distributed through various intermediaries before reaching retail traders. Understanding the different types of liquidity providers helps explain how your broker is able to offer competitive prices and fast execution. The main types of forex liquidity providers are: Let's look at each one in a little more detail. Tier-1 banks are the world's largest global banks that trade directly with one another in the interbank market. Institutions such as JPMorgan, Citi, Barclays, and Deutsche Bank continuously quote buy and sell prices across major currency pairs, creating the deepest and most reliable source of forex liquidity. These banks sit at the very top of the liquidity chain. Their enormous trading volumes allow them to offer some of the tightest pricing available, making them the foundation upon which much of the global forex market operates. Non-bank liquidity providers are specialist trading firms, hedge funds and High-Frequency Trading (HFT) companies that also supply liquidity to the market. Instead of relying on traditional banking operations, they use sophisticated algorithms and ultra-fast technology to continuously quote prices and execute trades. Many of these firms specialise in providing liquidity for specific currency pairs or trading sessions. By competing alongside the major banks, they increase overall market depth and often help keep spreads competitive, particularly during active trading hours. A prime broker acts as a gateway between the largest liquidity providers and institutional clients such as hedge funds, asset managers and larger forex brokers. Rather than relying on a single bank, prime brokers aggregate pricing from several Tier-1 banks into one combined liquidity pool. Their clients can then access multiple sources of liquidity through a single relationship, improving execution quality and reducing the need to connect to numerous banks individually. In simple terms, a prime broker brings together several streams of institutional liquidity into one convenient access point. A Prime-of-Prime (PoP) provider extends institutional liquidity to smaller brokers that cannot qualify for a direct relationship with a prime broker or Tier-1 bank. Direct access to the interbank market usually requires significant trading volumes, capital and regulatory requirements that many smaller brokers simply cannot meet. Prime-of-Prime firms bridge that gap by sourcing liquidity from prime brokers and making it available to smaller market participants. This lower barrier to entry allows many retail forex brokers to offer institutional-quality pricing and execution without needing their own direct banking relationships. An Electronic Communication Network (ECN) is a technology-driven marketplace that automatically matches buy and sell orders from multiple participants. Rather than relying on a single institution to provide prices, an ECN combines orders from banks, brokers, liquidity providers and other traders into one electronic marketplace. Because prices are matched transparently and anonymously, ECNs often provide highly competitive spreads, particularly during periods of strong market activity. In many respects, an ECN becomes a liquidity source in its own right by electronically matching buyers and sellers in real time. For traders using ECN-style accounts, this often means direct access to deeper pools of liquidity with pricing sourced from multiple institutions simultaneously. Although each type performs a slightly different role, they all contribute to the same objective: ensuring there is enough liquidity available for trades to be executed efficiently. By the time your order reaches the market, it may have passed through several of these layers, but all of them are working together to deliver the fast execution and competitive pricing that traders expect today. A forex broker and a liquidity provider work as partners behind the scenes to ensure your trades are executed quickly and at competitive prices. While traders often focus on the broker they can see, it's the liquidity providers in the background that make those prices possible. Most brokers don't create liquidity themselves, they source it from one or more liquidity providers. Every time you place an order, your broker searches its network of LPs to find the best available price before routing your trade for execution. The process happens in fractions of a second and usually looks like this: This competitive process helps brokers deliver tighter spreads and better execution than if they relied on a single source of liquidity. Although the trade feels like a single transaction from your perspective, both the broker and the liquidity provider perform different roles and earn their income in different ways. This arrangement allows each party to focus on what it does best: the liquidity provider supplies market access and pricing, while the broker provides the trading platform, customer support and order routing. Not all broker liquidity networks are built the same. Many established brokers connect to multiple liquidity providers rather than relying on just one. Their trading systems aggregate quotes from several institutions simultaneously, selecting the most competitive price available at that moment. For retail traders, this generally leads to: Of course, no broker can completely eliminate wider spreads or slippage during major economic announcements or periods of extreme volatility. However, a broader and deeper liquidity network usually provides greater resilience when markets become more challenging. It's also helpful to understand where different broker models fit into the picture. Neither model is automatically "better" than the other. What matters most is the broker's overall execution quality, transparency and regulatory standards. Understanding how your broker handles orders simply helps you make a more informed choice when comparing trading platforms. Example: You place a 0.1-lot EUR/USD buy order on your trading platform. Your broker instantly polls the liquidity providers connected to its network and identifies the lowest available ask price. One liquidity provider fills the opposite side of your trade, and your order is executed in milliseconds. You pay the spread, the broker earns a small commission or mark-up (depending on your account), and the liquidity provider earns the spread. The entire process is completed before you can even blink. For most traders, this entire chain remains invisible. Yet it's one of the most important systems operating behind every trade you place, quietly ensuring that clicking Buy or Sell results in fast, reliable execution. You'll probably never log into a liquidity provider's platform or even know which institutions are pricing your trades. However, they influence the things you notice every time you trade. From the spread you pay to the speed of your execution; the quality of your broker's liquidity network has a direct impact on your overall trading experience. In other words, while liquidity providers operate behind the scenes, their performance is reflected in almost every trade you place. Deep liquidity means more institutions are competing to quote the best prices. As competition increases, the difference between the bid and ask prices, known as the spread, typically becomes smaller. For me, this is one of the biggest advantages of good liquidity. Even a fraction of a pip saved on every trade can add up over weeks or months, especially if you're an active trader or scalp the markets regularly. Read more: What Is the Spread in Forex? Learn to Calculate and Trade It A strong liquidity network means there's usually a willing buyer or seller available the moment you place your trade. Instead of your order waiting to be matched, your broker can route it to a liquidity provider that already has a price available. Under normal market conditions, this allows trades to be executed in milliseconds, helping you enter and exit positions at the price you intended. This becomes particularly valuable in fast-moving markets, where every fraction of a second can make a difference. Slippage is the difference between the price you expect to receive and the price at which your trade is actually executed. No liquidity provider can eliminate slippage entirely, particularly during major news releases or sudden market shocks, but deeper liquidity helps absorb larger orders without causing significant price movement. As a result, you're generally more likely to receive a price that's close to the one you clicked on, particularly during normal trading conditions. Markets don't always move calmly. Interest rate decisions, inflation reports and unexpected geopolitical events can all trigger sharp price movements. During these periods, high-quality liquidity providers continue quoting prices wherever possible, helping the market function even when volatility increases. Spreads may still widen temporarily, but deeper liquidity generally reduces the likelihood of severe price gaps compared with markets where liquidity is thin. For retail traders, that can mean a more consistent trading experience during the moments when execution matters most. Read more: What is forex volatility? Definition, causes, strategies Almost every broker advertises tight spreads and fast execution. Those promises don't appear by magic; they're largely a reflection of the liquidity sitting behind the broker. A broker with access to multiple high-quality liquidity providers is generally in a stronger position to offer competitive pricing, efficient execution and better overall trading conditions. While you'll never interact with those institutions directly, you'll experience the results every time you place a trade. Once you understand what's happening behind the scenes, those marketing claims become much easier to evaluate. They're really telling you about the strength of the broker's liquidity network, not just the trading platform itself. Retail traders don't choose a liquidity provider directly; that's a decision made by the broker. Behind the scenes, brokers carefully evaluate potential liquidity providers to ensure they can offer competitive pricing, reliable execution and a smooth trading experience for their clients. Here are some of the key factors brokers consider. One of the first things brokers assess is execution quality. A good liquidity provider should be able to process orders with minimal latency, high fill rates and consistent performance, even during busy market conditions. Fast execution helps reduce delays between placing an order and having it filled, giving traders a better chance of receiving the price they expected. Not all liquidity pools are equally deep. Brokers typically favour providers that can supply substantial trading volume while maintaining competitive bid and ask prices. Deeper liquidity generally allows larger orders to be executed with less market impact and helps keep spreads tighter during normal trading conditions. For retail traders, this often translates into lower trading costs and more consistent execution. A liquidity provider also needs to integrate seamlessly with the broker's trading infrastructure. Many institutional connections use a FIX API (Financial Information eXchange Application Programming Interface), the industry-standard protocol for transmitting market data and trade orders between financial institutions. Think of it as the high-speed communication link that allows a broker's trading platform to exchange prices and orders with its liquidity providers efficiently. Reliable technology helps ensure quotes are delivered quickly and trades are executed accurately. Trust is another important consideration. Brokers generally prefer liquidity providers with strong financial backing, proven operational stability and appropriate regulatory oversight. A reliable provider is more likely to continue delivering consistent pricing and execution during periods of heightened market volatility. This doesn't eliminate market risk, but it helps reduce operational risk behind the scenes. Many brokers now offer more than just forex. They may also provide access to CFDs on indices, commodities, precious metals, shares and cryptocurrencies. Choosing a liquidity provider that supports multiple asset classes allows brokers to source pricing from fewer providers while offering clients a broader range of markets through a single platform. Read more: How to choose the best forex broker in 2026 As a retail trader, you'll rarely know which liquidity providers your broker uses, and in most cases, you don't need to. What matters is the outcome. If your broker has built strong relationships with high-quality liquidity providers, you're more likely to benefit from tighter spreads, faster execution and more consistent pricing. It's one of the many behind-the-scenes decisions that quietly shapes your trading experience, even though you'll never interact with the liquidity providers themselves. A liquidity provider is a financial institution or specialist trading firm that keeps markets running efficiently by ensuring assets, including currencies, are always available to buy and sell. By continuously quoting both buying and selling prices, liquidity providers help traders execute orders quickly and at competitive prices. Forex liquidity providers are typically major global banks, specialist trading firms and market makers that stand ready to buy and sell currencies at any moment. Together, they provide the liquidity that keeps the multi-trillion-dollar-a-day foreign exchange market operating smoothly. A liquidity provider supplies the pricing and trading volume needed for currency trades to be executed efficiently. By continuously providing buy and sell quotes, liquidity providers help ensure traders receive fast execution, competitive spreads and reliable access to the market. No. A broker provides traders with access to the forex market and executes their orders, while a liquidity provider supplies the prices and liquidity behind those trades. Some brokers operate as market makers, making them one type of liquidity provider, but the two roles are not the same. Sometimes. A market maker is one type of liquidity provider because it continuously quotes both buy and sell prices and stands ready to take the opposite side of trades. However, not every liquidity provider operates as a market maker, as many simply supply liquidity to brokers and institutions. Choosing a liquidity provider is primarily an institutional decision made by brokers, banks and investment firms. They typically evaluate providers based on execution quality, the depth of available liquidity, pricing competitiveness, technology integration, regulatory standing and overall reliability to ensure clients receive the best possible trading conditions. Every time you place a forex trade, there's an entire network working behind the scenes to make that execution possible. At the heart of that network is the liquidity provider, the bank or specialist trading firm supplying the prices and trading volume that allow orders to be filled quickly and efficiently. Although you'll never deal directly with a liquidity provider, its influence is reflected in the spreads you pay, the speed of your execution and how smoothly your trades are handled when markets become volatile. The stronger the liquidity behind your broker, the better your overall trading experience is likely to be. After more than 15 years of trading, I've learned that phrases like "tight spreads" and "fast execution" aren't just marketing buzzwords. Once you understand who's really standing behind the quote on your screen, those claims start to mean something, and you'll have a much better idea of what to look for when choosing your next broker. Lee W. is a seasoned professional trader with over 10 years of experience. Passionate about sharing valuable expertise and unique market insights, Lee W. now serves as an external and independent market analyst for RADEX MARKETS. Reviewed by RADEX MARKETS Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment. Deeper into liquidity: Related concepts: