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Beware of Trading Illiquid Currencies

Beware of Trading Illiquid Currencies

5 Years ago | December 18, 2014 00:00:00

The experience with the Russian ruble (RUB) recently should be a stark reminder of the dangers of trading in an illiquid market. Not only can volatility spike and spreads widen to make a currency untradeable, but you also risk losing your liquidity provider. This happened this week when two forex brokers that we know of (there may be more) stopped quoting USDRUB. There is a good lesson to be learned from this experience and as I will explain, it goes beyond the USDRUB.

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