Mason Ethan L_ Smith#8

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What is liquidity risk management in forex trading?

Liquidity risk means being unable to execute trades at fair prices due to lack of buyers/sellers. Institutions manage it with diversified liquidity providers, aggregation, and staggered execution. Retail traders manage liquidity risk by trading major pairs, avoiding off-hours, and using limit orders. Benefits: lower slippage and improved execution. Risks: flash crashes or exotic pairs can create huge gaps. Liquidity risk management ensures traders avoid forced exits at unfavorable prices. The lesson: survival depends not just on being right, but on being able to transact when needed.