7 Best & Most Volatile Forex Currency Pairs To Trade

Most Volatile Curreny Pairs

Foreign currency exchange has always been in the light for its liquid prospects. Traders know the volumes in it never ceases to exist and give immense opportunities for traders to explore financial markets unabashedly. Currency pairs are easily saleable, and you can purchase them through a legit broker and exchange. The liquidity aspect of the foreign currency exchange market draws such huge traffic. Let’s talk about the 7 best & most volatile currency pairs to trade.

What are currency pairs?

A currency pair is the combination of two currencies from different countries. Here, the value of one currency gets quoted against the other. There’s a comparison of one currency to the other. Depending upon the valuation, trading or selling and buying of currencies take place in the forex market.

It is the only market globally that does not stop working for a minute during the working week. That’s why people have so much trust in forex trading. There are multiple changes in a day for investors.

The facilitation of exchange for different currencies gave rise to the need for the forex market.

What are the types of currency pairs?

Primarily, there are two types of currencies in a currency pair, base currency and quote currency.  The first currency of the currency pair is known as the base currency while the other one is the quote currency. When the trading occurs, one currency gets traded against the other.  It means the number of quote currencies required to buy a unit of the base currency.

For identifying currencies, there is an ISO code or an alphabet code of three letters.  For the Euro it is EUR and for the US dollar, the ISO code is USD. 

A currency pair denotes the price quote of an exchange rate for two distinct currencies getting traded in the forex market.

Currency pairs get traded in the foreign exchange market.  The market works for twenty hours a day and five days per week.  Also, the market does not become dysfunctional even during several public holidays. It does not work on weekends, Saturdays, and Sundays.  So, when there’s cessation, fx traders have nothing to do.

Every trader randomly picks up one currency that seems to be benefitting them and sells another to purchase that one. That’s how the circle of currency exchange continues. One currency with the highest demand witnesses the biggest surge in the market.  However, you can sell an entire pair as a complete unit.

When you trade a currency pair from a broker or an exchange, you are trading to make profits. Thus, you find the best pair that can inherit the legacy of maximum benefits over time. 

Process of currency markets

There’s a huge range of susceptibility that comes along the fx currency market.  Forex pairs are not a cakewalk while it may seem from the far. For foreign exchange trading, a forex trader has to be vigilant and trading the best volatile currencies.

How to calculate volatile currency pairs?

The currency volatility is measure by the calculation of standard deviation or currency price’s deviation movements. It provides ideas to traders and investors about the relative trend of the currency market.  By looking at the currency pair’s average true range, traders can easily gauge or vet the capacity of volatility.

You can look at the percentage spot and gauge the direction of the currency pair before investing in it. Forex currency pairs require consistent monitoring of the market.

The greater the volatility of currency pairs, the better are the opportunities for you to earn money. However, the degree of risk also skyrockets simultaneously. Volatility, benefits, and perils are almost interchangeable. One cannot happen without the other. Hence, experienced traders do not mind putting up their money in it.  However, you have to apply the risk management strategy to mitigate any potential risk.

On average, different price fluctuations give a variant level of benefits and losses to traders. The rewards perpetuated by volatile currency pairs are great. Thus, the benefits they earn are far better.

However, while trading with such currency pairs, traders should work with reducing pair sizes.

The standard exchange hours for trading in the forex market are 9 Am to 4:30 Pm. So, if you are trading anywhere between, the purported gains belong to you.

Types of forex pairs for trading

A currency pair has three divisions: Crosses, majors, and minors.

Crosses:  Any currency pair that does not have the US dollar falls under the crosses. Here, it may or may not have any major currency but the greenback is absent or missing.

Majors: These are the most popular forex pairs which have the inclusion of the US dollar. The volumes of these currency pairs are the highest compared to other normal currencies. So, if you are trading with them, the probability of profits is always higher. 

A forex pair with a great number of sellers and buyers can reap amazing rewards because you can always use the swap option and that can lead you to become rich in quick time.

The liquidity aspect it enjoys is second to none. You can research and find these pairs easily and that’s why the competition is quite high.

Minors: The currency pairs are devoid of the US dollar. However, there’s a major currency in it for buyers and sellers. For example GBP.

The level of liquidity is lesser here. That’s why volumes are fewer compared to the majors. Also, price fluctuations are less.

What factors make a great currency pair?

There are many factors and elements to buy and sell a currency pair and that decides their fate. Time, predictability, stability, liquidity, inflation, trade wars, foreign relation, and affairs, etc.  Anyone, who knows about these important rules, then he/she can earn more money than stock trading. 

Data releases each day about various factors influencing the forex currency market, If you can follow that religiously and brought that in use, then trading becomes easy and you gain lots of benefits. Follow the norms of information and stand a chance to rescue yourself from any potential crisis in the market too.

Time and region of trading

While you trade in the forex market, day, time and region matter the most. Moreover, you should always back yourself with a trading strategy. If this information is placed, then profit-making becomes simpler for a forex trader. Thus, the trading day route is pivotal.

  • The market first opens in Asia
  • After that, it moves to the middle east post the complete Asian session
  • Europe and London are the next destinations for it, which keeps it going.
  • New York and the US are the final places. However, it again rolls back to the Asian market.

It means the forex market may continue for the whole day, but every market has different timing for opening. Thus, volumes and types of trading may differ too. There’s a distinct thought process and reasons for trading forex.  For example, if you are living in the US and trading some currencies, then expectedly, Asian and Middle-East markets will be closed by that time. So, there may be some interest rate differentials coming into play.

The time and date of trading will let you explore different forex currency markets. Also, your fortune depends largely on that.

Price stability

If you are trading currency pairs, then price stability is one of the most crucial aspects that is linked to the health of an economy intrinsically. Any nation that does well as a currency doing great too. Thus, the economic condition of a country is important while you choose to work with a forex broker like 101investing or Global TradeATF.

For example, GBP for Britain and USD for the US. These nations are sound, economically and possess veto powers. So, their market price will always remain in an exalted position compared to others. 

So, if you are unsure about choosing a currency pair, pick up the price stability card and judge for yourself. 

Liquidity

If you are trading in the forex markets, you should know characteristics like the price movements, high risk of losing, volatile forex pairs, different market currencies that can benefit you from trading, which investor accounts lose money and how can forex traders avert that.  If you can get these things in the line of your trading plans, then you can champion the forex volatility in your favour.

You can determine which currency pairs to trade the whole day. Once you get the idea, the entire process of forex trading seems easier than ever before. There’s no chance of losing money rapidly due to any factor.

Retail investor accounts offered by forex brokers like PrimeFin, TradedWell, and ROinvesting can help you elevate your profitability criteria in the market.  As a forex trader too, anyone would prefer those pairs that can help them settle for maximum benefits with no hassles.

However, it comes loaded with an exception too. People can take advantage of the erratic performance of the market. The less liquid currency pairs can also assist you in taking advantage. The method of scalping is beneficial because traders get the chance to buy and sell small units of currencies.

Predictability

If you can predict the market, then it is easy for you to trade volatile forex pairs.  Forex trades can cast away the risk lurking with currencies.  Volatile currency pairs often offer immense historical data that helps in predicting the future of a currency. For example, if you are selling the British Pound against the US dollar, you would know the amount of profits it can provide you.

Also, the prediction of the price movement and forex volatility is determined without a miss. If you want to know how a currency is likely to perform in the future, then pick up the data of the past. Everything becomes crystal clear.

However, currency pairs that do not render much information or are new cannot be predicted because there’s hardly any piece of data or information available. So, you can lose money when trading those currencies.

Here are the top volatile forex currencies for trading

Major currency pairs lead to accumulating wealth and prosperity for a currency trader. Retail investor accounts lose no funds while trading with it.

EUR/USD

The currency is the combination of the European euro and the US dollar. Both are individually the strongest forex currencies with heaps of trust of the world. Forex traders use them for international trades and exchange them for goods.  Thus, the currency pair is the most traded one globally.

The currency pair is reliant on the European Central Bank, the non-farm payroll, and the US Federal Reserve.  So, if you know how they work and their decision-making attributes, then wealth accumulation is a matter of time.

GBP/USD

It is a major pair that has the British Pound and the US dollar as currencies. The price movements are way higher here and lean on volatility factors.  It depends largely on how well the American and British economies are doing. If they perform better, there’s a huge possibility of profits.

The exchange rate of these pairs relies on the US Federal Reserve and the Bank of England.  However, there may be a slight concern due to Brexit, but if you can monitor the market closely, it will feel like a minuscule thing, which is manageable.

USD/JPY

The risk of losing money in the USD and JPY pair tends to zero. That’s why forex brokers recommend the pair to buyers. Japan is the third-largest economy of the world. Thus, the Japanese Yen is among the hot currencies. Also,  the United States is in the numero-uno position in terms of the economy. So, price movements are relatively higher in it compared to other forex currencies.

If you want to excel in currency trading, include the pair. In the Asian market, the Japanese Yen gets traded the most and the US dollar is the most traded currency worldwide. Thus, the combination is lethal for traders.

The Bank of Japan and the US Federal Reserve impact the growth of the pair. Besides, natural calamities and Japan and the United States also impact their rates.

AUD/USD

The Australian dollar and the US dollar make for a profound currency pair for trading.  AUD is mostly a commodity currency because its rise in the market depends on the exports of its commodities or goods.

The exports of gold, iron ore and other essential commodities help in maintaining the currency at a higher position for Australia. The Federal Reserve of the US and the Reserve Bank of Australia determine the interest.

EUR/GBP

This currency pair may be a minor one, but individually we know what these currencies are capable of pulling the best results for forex traders. The geographical arrangement also makes the pair tradeable for market players.

However, due to Brexit, now the pair has become difficult to predict.

USD/CAD

It is a major pair that is the combination of the Canadian dollar and the US dollar. If you want to determine the range of the movement for the CAD, monitor its oil prices, which is the point of reliance for Canada.    It is the primary export of the country.

The value of the Canadian dollar is directly proportional to the price of oil. So, you can predict that market accordingly.

USD/CHF

It includes the Swiss Franc and the US dollar. Switzerland is dependent on tourism. If that sector does well then you can know the reason for its currency’s massive growth. During periods of political and economic disasters, it is a safe place for investment.

How’s a Demo Account important for forex trading?

You can do risk management by the application of a demo account. By using it, you can know when to invest in the forex market and what are issues a trader may face while trading in real-time. The account prepares you mentally. 

Conclusion

Trading currencies like Swiss Franc, Yen, Canadian dollar or CAD, JPY, New Zealand dollar, or NZD along with the USD is a major boon. These all make for the most volatile currency pairs, which have high profitability factors. On the contrary, the least volatile currency pairs can doom the future of a trader. You can lose money when trading them.

If you wish to ignore the high risk of losing, then trading with the seven best volatile currencies is beneficial.

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