Hi everyone 
Imagine if your broker can’t take the risk they pass it to Liquidity provider, please who are those guys and how they work?
banks usually, brokers cannot take the risk of supporting a trade outcome, they connect the trades to banks.
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they are typically large financial institutions like banks. They manage risks and ensuring market stability.
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Here the liquidity supplier is banks so far I know.
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Liquidity providers in the context of Forex trading are typically large financial institutions like banks or hedge funds. They play a crucial role by buying and selling currencies, thus providing the necessary liquidity to the market.
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There’s a babypips lesson on this subject!
Reputable forex brokers will base their price on the prices of other FX participants, usually banks and other non-bank financial institutions (NBFIs) from the institutional FX market.
These market participants are known as liquidity providers (LPs).
A group of liquidity providers (LPs) is known as a liquidity pool.
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As far as I know, when a broker can’t handle a trade’s risk, they often turn to Liquidity Providers (LPs). These are financial entities, like banks or large financial institutions, that act as a bridge between retail brokers and the broader financial market
Your trade, initiated with a retail broker, might be too large or risky for them to handle alone. So, they route it to an LP who has the resources and willingness to take on that risk.
Liquidity providers are institutions that facilitate trading by supplying assets. They handle risk for brokers, enhancing market efficiency.