Providing liquidity?

[kdixon]

I'm trying to understand the concept of providing liquidity. What does it mean for a trader to provide or take liquidity? Thanks.

 

[crgarcia]

Quote from kdixon:

I'm trying to understand the concept of providing liquidity. What does it mean for a trader to provide or take liquidity? Thanks.

Providing liquidity means that the Fed lends more money and makes borrowing easier, with less interests for troubled banks and financial institutions.
All other things being equal this is bullish (goes up) for the stock market.

Taking liquidity away means the Fed makes borrowing more difficult, with more interest, in an attempt to "cool down" an "overheated" economy. It is usually bearish (goes down) for stocks.

 

[traderpro]

Quote from crgarcia:

Providing liquidity means that the Fed lends more money and makes borrowing easier, with less interests for troubled banks and financial institutions.
All other things being equal this is bullish (goes up) for the stock market.

Taking liquidity away means the Fed makes borrowing more difficult, with more interest, in an attempt to "cool down" an "overheated" economy. It is usually bearish (goes down) for stocks.

I think he means add/remove an order. If you post an order and get taken you get paid(ecn fee) if you take or hit you pay the ecn fee.

 

[kdixon]

Thanks!