Post of the Day: Volatile Currency Pairs

[B]Student’s Question:[/B]

Please… I would like you to clarify how a volatile pair is determined? How can I know a volatile from a non volatile pairs?

[B]Power Course Instructor’s Response:[/B]

The definition of volatile currency pairs would be those that move the most dramatically over the course of a chosen time period…a day for example.

High to very high volatility pairs include the GBP/USD, GBP/CHF, GBP/JPY, EUR/AUD, CAD/JPY, and EUR/CAD.

AUD/NZD, EUR/GBP and CHF/JPY would be examples of slower moving (less volatile) pairs.

The Average Trading Range of the GBPJPY on a Daily chart is almost 400 pips while the EURGBP is about 150 pips over the same time frame.

The volatility of a pair can be determined by using the ATR (Average Trading Range) indicator that can be found on most charting packages. When the ATR indicator is placed on the chart of a currency pair, it will give the average number of pips that the pair would move over the time frame represented on that chart.