The forex market is one of the most liquid markets globally, with daily trading volumes of major currency pairs reaching trillions of dollars. Market liquidity determines the speed of transactions and price stability at any given moment. Higher liquidity means less volatility and narrower spreads, while lower liquidity (such as during off-peak hours or major news releases) increases volatility and widens spreads. Traders need to pay attention to how liquidity affects volatility, especially during low-liquidity periods when market fluctuations can heighten risk.