The organizations that give access to Forex liquidity provide the best rates for you to choose from when you want to make a trade. These are mainly financial institutions or investment organizations with access to order flows from many sources, enabling them to offer better prices than typical retail accounts. Banks, hedge funds, and Forex brokers are some of the most popular sources of liquidity.
The best price on any given product is known as prime of prime liquidity (PoP) solutions. These prices are often saved for big accounts overseen by banks or other financial institutions. These quotes are complicated to find, but if you can do that, they can result in considerable profit margins for your deals.
Since your account must be prime, you cannot access standard quotes like you can with prime of Prime liquidity. These accounts are usually handled by banks or other financial institutions.
The main benefits of using PoP liquidity
Commonly, retail traders cannot deal directly with the bigger banks and do not have access to their liquidity pools. A Prime of Prime liquidity provider company maintains an account with one of the bigger banks and enables its clients to trade with them. This results in consistently lower rates, but it’s essential to bear in mind that brokers will turn down many trades from small retail accounts if they have to fulfill orders from big institutions that are pretty large in size. The Prime of Prime liquidity provider allows you access to quotations that are often exclusively provided by banks, hedge funds, and other financial organizations.
It is also worth adding that you can trade at the best market prices thanks to Prime of Prime Liquidity. Better earnings and high earning potential result from this. Since a large financial institution is the source of this liquidity, the quotes provided by these organizations are frequently provided relatively quickly. Additionally, suppose you have an account with one of the more prominent brokers with access to prime liquidity providers. In that case, you can benefit from the leverage of up to 100:1. The major banks, finance companies, and FX brokerages typically have access to these accounts. You can access Prime of Prime liquidity if you have an account with one of these organizations.
Furthermore, traders can use the leverage that these providers of FX liquidity offer. Clients of certain brokers, for instance, have access to leverage of 100:1 on EUR/USD pair trading. When compared to retail brokers, these accounts typically have lower trade fees, allowing you to increase the return on your investments.
What are the limitations of Prime Liquidity?Â
Even if utilizing a Prime of Prime Liquidity account entitles you to higher rates and all the advantages that go along with it, there are a few things you need to be aware of before trading with one. First, as was already noted, only large Forex brokerages have access to these liquidity providers due to commissions and fees levied on larger trades. Smaller accounts will struggle to get these quotes, which will substantially restrict the value of your deals. Additionally, these businesses typically do not have margins greater than 100:1. You might not get assistance from the liquidity providers if you deal in a product with a margin less than 100:1.
One more moment is that you should also be aware that some banks might not permit weekend trading. Eventually, if liquidity providers see any strange behavior, they will lock your account, which might be a big problem for several accounts
What are the requirements to use Prime of Prime liquidity?
Traders require an account with one of the bigger brokers that has access to this kind of supplier in order to work with Prime of Prime liquidity accounts. These accounts can only be opened through specific Forex brokerages; you cannot open them on your own or through retail brokers. Your request will probably be denied if you don’t have an account with one of them, and your trades will only profit from market-wide standard prices from other traders.
Being an active trader for a specific period of time is another prerequisite for using this type of account. A minimum monthly trading volume and a solid trading track record are also recommended in the arsenal.
As a final word, it should be noted that you can trade more efficiently with Prime of Prime liquidity because it offers better prices. Nevertheless, this type of trading account is only available to large accounts. Small accounts may not benefit from such a service since they are not sufficiently large. If your broker does not have one already, it may be challenging to get one because these accounts are usually reserved for the largest brokers, banks, and financial institutions. You should open an account with a broker that offers these quotes if you wish to trade with them. The concept behind PoP liquidity is straightforward: it gives traders access to higher pricing than they would ordinarily obtain to provide them with a trading edge. Despite some restrictions, such as minimum trade size, weekend trading, or account lockout in unusual activity, Prime of Prime FX liquidity products compensates for these drawbacks with several advantages.
