Hi Guys
What are the most volatile major pairs and what are the most volatile exotics pairs with tight spreads?
Thank you
Andrew
The most volatile major pair I can think of is EUR/USD. Then there are GBP/USD and USD/JPY.
Yes eurusd usdjpy usually has low spread and good average movement daily, but if want to trade on cross pair like as gbpjpy this is also having good average movement daily but spread usually higher than major pair, and if want more extreme instrument trading, gold is very high average movement daily
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EUR/USD has the tightest spread of all pairs, at least in my experience. Apart from EUR/USD, EUR/JPY, GBP/USD also have tight spreads and are pretty volatile. USD/CHF is very volatile, if one dares to trade that. I don’t.
“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.”
The major pairs are composed with EUR, USD, JPY, GBP.
Table of The Most Volatile Currency Pairs
For the purpose of this study let’s take 7 major currency pairs, cross and exotic currency pairs, and draw up a comparative table on the basis of the obtained data:
The Most Volatile Currency Pairs – TableThe table shows that today the most volatile Forex pairs are exotic ones. Namely, USD/SEK, USD/BRL, and USD/DKK. All of them move for more than 400 points per day on average.
The volatility of the major currency pairs is much lower. Only GBP/USD, USD/JPY and USD/CAD move for more than 100 points per day. EUR/USD turned out to be the least volatile currency pair.
As for the cross rates, GBP/NZD, GBP/AUD, GBP/JPY, and GBP/CAD refer to the currency pairs with highest volatility. All of them move for more than 200 points per day on average.
EUR/CHF, CAD/CHF, AUD/CHF and EUR/GBP differ like less volatility fx pairs among the cross rates. The amplitude of their movements doesn’t exceed 90 points per day.
The Bottom Line
You may conclude on the basis of such statements that trading in exotic currency pairs or cross rates promises large profits. However, it isn’t quite so simple. Indeed, the range of exotic pairs’ movements is much broader than that of the major ones.
However, such a high volatility is a result of low liquidity, and trading in illiquid currency pairs carries particular risks for a trader.
The fact is that various technical analysis techniques might not work in such situations. That is, if you decide to trade, say, in USD/SEK or GBP/NZD, your analysis may not work as effectively as, for example, when trading EUR/USD. Also technical analysis patterns might generate false signals.
This is because the psychology of the market behavior in its most liquid form makes up the backbone of technical analysis. If the liquidity of a trading instrument is lower, the validity of technical analysis comes under question.
The second problem a trader can face when trading in volatile financial instruments is a wide spread (additional trading expenses).
Happy Pips!
PipsFisherman
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According to me, Gold & GBPJPY. By the way, volatile trading pairs are more risky so take enough preparations before the live trading.
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Yep, I can confirm that majors like EUR/USD, USD/JPY, GBP/USD are the most volatile with the tightest spread. EUR/GBP and EUR/JPY are volatile as well but here the spread is a bit higher. As for the exotics, I usually prefer to stay away because to be honest I find them a bit riskier most of the time.
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