most volatile currency pairs: Top 10 Most Volatile Currency Pairs How to Trade Them IG International

The GBP/AUD pair is comprised of the British pound and the Australian dollar. Historically, these two currencies have been correlated, particularly since Australia is part of the Commonwealth of Nations. However, being a commodity currency – as previously mentioned – the price of AUD is heavily linked to the value of Australia’s exports. Some of the top exports from New Zealand are dairy, eggs, meat, wood and honey.

That being said, there are a few things to bear in mind before opening a position on a volatile currency pair. However, with a well-thought-out trading plan and risk management strategy in place, there is little to fear from volatile currency pairs. Despite the fact that more liquid markets, such as the foreign exchange market, have reduced volatility, some currency pairs are more volatile than others for a number of reasons. The currency pair‘s volatility will have an impact on practically every element of forex trading.

The Most Volatile Currency Pairs in 2023

With so much volatility in the market, it can be tough to predict exactly which currency pairs will be the most volatile in 2022. However, we have compiled a list of the most volatile currency pairs, along with some of the least volatile and the most liquid based on trends and forecasts from the forex markets. It is hard to determine the most volatile currency pairs because volatility affects many different currency pairs. Price movements are always calculated in terms of pips, and if a currency pair moves by 200 pips at a given time, it is considered a more volatile pair than the one moving by 20 pips given the same period. A definitive list of the most volatile currency pairs is hard to collate, chiefly because volatility can affect different currency pairs at different times.

My mission here is to try to help new traders become familiar with different aspects of the trading world and of course to share my past and new experiences. Normally there are 259 to 261 daily candles in a year or 12 months, you can use “date range” tool on the tradingview to find out the number of candles as well, so the length of ATR is between 259 to 261. You don’t need to calculate anything, ATR does and on every new daily candle it’s updated. It’s not that important when you take long-term positions or you are a position trader or swing trader.

As illustrated in the chart, these pairs have the highest Intraday Realised Volatility over a 10-year average, making them on average the most volatile currency pairs to trade. These pairs offer relatively low liquidity, increasing their volatility. Overall, the most volatile currency pairs tend to be the minors and minor crosses, while most of those who undergo forex trading prefer to operate in the far more liquid major currency pairs and major crosses. The 10 most volatile forex pairs of 2020 have therefore been divided into two groups below that correspond to majors and minors. This means you must always stay ahead of the curve if you want to be a successful trade.

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Some traders prefer trading exotic pairs because they have high volatility rates, which means that they can return higher gains. However, they are riskier because they include economies that are unstable and inconsistent. Volatility refers to the market price stability or instability during a specific period of time. Ideally, volatility enables traders to make money in different financial markets.

This currency pair has seen additional bullish conditions during recent trading sessions as a collective attack waged on vulnerable resistance mounts. The resistance levels of the USD/BRL have seen increased pressure in addition to higher values which appear to be attainable. Not only is JPY a safe haven currency, but it has a history as a low-yielding currency which makes it an attractive vehicle to fund carry trades.

What Did We Learn from the Most Volatile FX Pairs?

most volatile currency pairs in Forex goes 24 h a day, which means traders can always check up with the market and make trading operations. However, for successful intraday trading you need most volatile currency pairs, which will make your trading most efficient. Although highly liquid markets such as the foreign exchange market usually have lower levels of volatility, there are many reasons why certain currency pairs are more volatile than others. If you are a trader, you know how sometimes some assets can achieve 100 pips in just a few hours. However, some currency pairs oscillate around the same price for several days. For example, one-time EURCHF was several days only in the 15 pips range.

Forex pairs that move the most pips are USD/RUB, USD/TRY, and USD/ZAR. On the other hand, the least volatile currency pairs are AUD/NZD, EURCHF, EURUSD, AUDCHF, USDCHF, EURCAD, etc. Indeed, the range of exotic pairs’ movements is much broader than that of the major ones. However, such high volatility results from low liquidity, and trading the low liquidity currency pairs carries particular risks for a trader. Currency volatility is characterized by frequent and rapid changes to exchange rates in the forex market.

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Consistent price action and trending markets defined market behaviour. For many active investors and traders, the pricing fluctuations created a collection of unique opportunities and also a dynamic risk environment. The primary difference between high and low volatility pairs is that volatile pairs normally gain/lose more pips over a certain time period, thus they are riskier to trade. Moreover, frequent price moves are more likely to result in slippage.

As covered above, there are various technical indicators you can use to anticipate market sentiment and make predictions about future price direction. While not definitive, using charts and indicators will help you formulate your strategy and choose when to trade. GBP/USD is an excellent forex pair for trading during the US sessions because it provides a window into the relative strength of the economies of the United Kingdom and the United States. This pairing is closely correlated with broader economic health and can therefore be used as a barometer to assess the overall state of these two giant economies. These two currencies have historically been linked, especially because Australia is a member of the Commonwealth of Nations. However, as a commodity currency, the AUD’s price is greatly influenced by the value of Australia’s exports, as previously stated.

However, by reading this article tohttps://g-markets.net/, you’ve taken your first steps towards picking up the top volatile forex pairs. The relationship between the New Zealand and Japanese yen is similar to that of AUD/JPY. This is because NZD is also a commodity currency, with its value mainly tied to exports of meat, dairy products, eggs, honey, and wood. When any of these products change in price, it can affect the volatility levels of NZD/JPY. Traders looking to trade lower volatility pairs may favor a strategy of swing trading.

• The value following the currency pair denotes how many units of the quoted currency equal one unit of the base currency.
• Currency option prices are often notably affected by the market’s anticipation of shifts in the underlying currency pair’s volatility.
• Changing that you probably refer to is the mistake I made this year.
• Both of the currencies in this pair are stable currencies which leads to minimal fluctuations in price.

There is, however, one common pattern that frequently emerges in Forex trading which involves what is known as ‘herd mentality. This occurs when traders decide to take a chance on a volatile market due to the influence of other traders who are doing the same. Relative Strength Index – which can be used to measure the magnitude of price changes and may also indicate whether a currency has been overbought or oversold.

• The most volatile forex pairs by percentage in the last several years are USD/RUB, USD/TRY, USD/BRL, USD/ZAR, USD/SEK, and AUD/JPY.
• For example, the GBP has been highly volatile in recent years due to uncertainty surrounding Brexit and its economic implications.
• The reason for this is due to the high and low liquidity levels among the currency pairs.
• As leaving the European Union will undoubtedly affect Britain’s economy, investors have been keen to open a position on the currency pair at key points during negotiations.

It’s assumed it doesn’t go further one average candle and the shadow isn’t longer than an average candle. I’ve written a post about the best currency pairs to trade in which I talk about liquidity and mixing that with volatility. There is another side where the average daily range can be considered important particularly if you are a day trader or scalper. On the other hand, if you are a long-term trader and you have larger limitations, a few extra pips won’t be such significant. Of course, knowing the volatility here can help you to take a better approach in choosing suitable SLs and TPs according to the different currency pairs and their personality and move range. I knew a handful of them such as EUR/USD or GBP/USD and I’d just been familiar with the crazy GBP/JPY.