Christopher J872_ Moore

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What is market fragmentation in forex and how does it affect traders?

Forex lacks a central exchange, so liquidity fragments across banks, ECNs, and brokers. This means EUR/USD may quote slightly differently depending on the venue. Institutions solve fragmentation with liquidity aggregators, routing orders to best prices. Retail traders rely on brokers to access aggregated or internalized liquidity. Benefits: competition reduces spreads. Risks: inconsistent fills, arbitrage opportunities disappearing too fast, and lack of transparency. For traders, fragmentation explains why broker choice matters—better access to liquidity pools equals better execution. Market fragmentation is both a strength (competition) and weakness (complexity) of forex.