Forex Pairs with high volatility 2021: Must Read Before Trading

Forex Pairs with high volatility

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Forex pairs with high volatility are the best combination of currency pairs. As a result, investors can make significant returns in the forex market using volatility. Here we discuss the importance of volatility while trading forex pairs. 

But before that, you need to understand what volatility is and how you can use it for earning profits. So here, we also mention top indicators which are used for determining the volatility in the currency pairs. 

What is Volatility?

In Forex trading, Changes that take place in the value of currency pairs is known as volatility. It is calculated by the standard deviation. Standard deviation refers to how much costs should deviate from their mean. 

A volatile forex pair’s price always deviated from its average value. One must note that Forex pairs with high volatility mostly consist of lower liquidity, indicating there will be huge possibilities of extreme price movement in massive weekend gaps and direction. 

Classification of Forex pairs in different groups

The currency pairs are categorised into three groups such as Minor, Major, and Exotic Pairs. Check the difference between the three groups and check which currency pairs fall in which group.

Minor Forex Pairs

These are the forex pairs that do not consist of USD on either side of pairs. In this group, minor currencies should be grouped together like the Euro, UK GBP, and the yen. Check here the list of minor forex pairs.

  • GBP/EUR (British Pound/ Euro)
  • EUR/ CHF (Euro/Swiss Franc)
  • GBP/CHF (British Pound/ Swiss Franc)
  • GBP/ JPY (British Pound/ Japanese Yen)
  • CAD/ JPY (Canadian Dollar/ Japanese Yen)
  • GBP/EUR (British Pound/ Euro)
  • EUR/CDA (Euro/ Canadian Dollar)

Major Forex Pairs

These are the currency pairs that are highly traded across the world; they are known as the major currency pairs. These pairs consist of the lowest spreads and huge liquidity. Forex pairs with high volatility do not fall in this category. 

These forex pairs are considered major pairs because they consist of US Dollars on one side of the pair. Undoubtedly the US Dollar is the major currency that should be traded across the world. 

Check here the list of major currency pairs. 

  • USD/EUR (US Dollar/ Euro)
  • USD/ NZD (US Dollar/New Zealand Dollar)
  • GBP/USD (British Pound/ US Dollar)
  • CAD/ USD (Canadian Dollar/ US Dollar)
  • AUD/USD (Australian Dollar/ US Dollar)
  • USD/JPY (US Dollar/ Japanese Yen)
  • USD/CHF (US Dollar/ Swiss Franc)

Exotic Forex Pairs

These categories consist of stronger and bigger currencies against small currencies of developing nations. All these Forex pairs with high volatility show drastic price movement. They mainly consist of extremely high spreads. Checklist of exotic forex pairs:

  • EUR/TRY (Euro/Turkish Lira)
  • USD/HKD (US Dollar/ Hong kong Dollar)
  • AUS/MSN (Australian Dollar/ Mexican Peso)
  • USD/ZAR (US Dollar/ South African Rand)
  • USD/NOK (US Dollar/ Norwegian Krone)
  • USD/SEK (US Dollar/ Swedish Krona)
  • USD DKK (US Dollar/ Danish Krone) 

How to measure forex currency pairs volatility?

Volatility helps traders in estimating the right position of the currency pairs. Check here the indicators which are used for calculating volatility.

True Average Range (ATR)

This tool is the best for calculating actual volatility. This tool was created by J.W. Wilder. This is mainly used for calculating the price movement of currencies. Including, this is a highly used indicator by forex traders. 

Moving Average

This indicator will help traders in finding the market trend direction. This indicator can estimate whether you are trading in the right direction or not according to the trend. You can also determine the flat market condition while the price is not increasing or not decreasing. 

Check here the list of four major Moving Average indicators:

  • Simple Moving Average
  • Linearly Weighted MA
  • Exponential Moving Average
  • Smoothed Moving Average

Donchian Channels 

This is also an efficient indicator that is used for measuring relative volatility along with multiple tradable assets. You can use this indicator over all types of financial instruments like equities, currency markets, and Futures. 

These indicators help traders to determine Forex pairs with high volatility from the huge number of currency pairs available in the market. Investors can make huge profits through high volatility currency pairs.

How to trade Forex currency pairs with High volatility?

To determine which currency pairs go best with your trading style, traders need to check their trading strategies first whether their selected strategy is suitable for their currency pairs or not. 

Beginners must note that most traders who use a range trading strategy need to ignore exotic currency pairs. They can go with major currency pairs and select minor pairs like EUR/GBP and EUR/CHF.  

Whereas investors are applying a trend trading or breakout strategy need to consider Forex pairs with high volatility. Traders can pick those currency pairs from anywhere in the three categories: minor pairs (EUR/JPY and GBP/JPY) and exotic pairs (USD/ZAR and USD/TRY). 

We are not saying that you may not consider major currency pairs while using breakout strategy and trend trading, you can also use them, but you may be required to pay more attention to determine multiple levels of volatility present in them. 

The risk-bearing capacity of traders is also an essential aspect when traders are ready to bear large risk trading forex pairs currency pairs with High volatility. 

Risk-averse investors should perform currency trading more calmly with less volatility because they are not so worried about the sharp reverse and volatility which appears while trading specific currency pairs as Turkish Lira/ South African Rand crosses. 

Best Brokerage Platform for Forex Trading

The Brokereo brokerage firm is defining supremacy in the market of scalp trading. The broker allows you to create several strategies with allegiance to quick profit-making through scalping. The financial provider has several functions that aid clients. 

  • Cross-platform trading
  • 20+ analytical tools 
  • Vast currency pair choices
  • Get an account in three easy steps
  • The average execution speed is 0.04 seconds
  • Spreads start from 0.03 pips
  • Professional clients can exploit leverage up to 1:200 for larger positions. 
  • It offers 45+ currency pairs for traders, including major, minor and exotic.
  • Flexibility in platforms 
  • Achieve financial goals through highly effective trading terminals 

The broker also offers CFD trading on forex pairs. Here are the following currency pairs the trading portal provides for scalp trading:- 

EUR/CAD, CAD/CHF, CHF/JPY, EUR/USD, GBP/USD, USD/JPY, AUD/USD, and many others. 

What are the most volatile forex pairs?

Check here the list of the top 10 most volatile Forex pairs with high volatility. All these currency pairs are highly volatile, which traders can consider trading for earning returns. Investors who are ready to take risks can trade these Forex currency pairs. 

  • USD/ZAR
  • USD/KRW
  • USD/BRL
  • AUD/JPY
  • NZD/JPY
  • GBP/EUR
  • USD/TRY
  • USD/MXN
  • CAD/JPY
  • GBP/AUD

AUD/ JPY (FX Currency pair)

This forex pair consists of a pairing of AUD/JPY in which the Australian Dollar is the base currency, whereas the Japanese yen is the quoted currency. This pair consists of high volatility due to the inverse connection between the Australian Dollar and the Japanese yen.

Traders must note that the Australian Dollar should be commodity forex whose cost is directly connected to volume and the price of Australia’s exports, generally mineral price, metal cost and agricultural product price. 

Alternatively, the Japanese yen is hugely taken as the safest currency, which is an indicator that traders are always considering it during economic hard times. These features we will not get in Australian dollars.

The resultant of this is the price movement this forex pair should take place drastically based on the worldwide economic outlook. Here we provide a graph that represents the volatility of AUD/JPY. 

GBP/AUD (Currency Pair)

This forex pair is the combination of the British Pound and the Australian Dollar. If we do deep research, we find that these two currencies were connected with each other in the past, generally from while Australia is a member of the Commonwealth of Nations. 

Although, When AUS becomes a commodity currency, as we told you in the above pairs. The value of the Australian Dollar is directly connected to the price of Australian exports. These Forex pairs make their place in the list of Forex pairs with High volatility.  

GBP/EUR (FX currency pair)

This forex pair is a combination of the British pound and euro followed by Brexit. In this forex pair, the British pound is the base currency, whereas the euro is the quote currency in this forex pair. Volatility should appear constant in GBP/EUR currency pair. 

To understand the reason behind high volatility occurring in this pair, we will explain to you with an example. The GBP price increase compared to the euro due to the initial defeat of Theresa May’s Brexit deal which took place in January 2019 during the commons through 230 votes. 

This increment appears after a drastic drop of nearly 70% all over 2018, which indicates an imbalance surrounding the condition of the United Kingdom’s authority from the euro. Traders must note that the volatility of this currency pair will drop when a withdrawal agreement should be agreed upon, but there are no possible chances of appearing. 

NZD/JPY (Forex pairs)

This forex pair has the New Zealand dollar as a base currency and the Japanese yen as the quoted currency. The New Zealand dollar is also commodity forex whose price is totally dependent on New Zealand’s exports. Because of this reason, NZD/JPY is highly volatile. 

Particularly the New Zealand dollar gets affected by the New Zealand export involved in dairy, meat, eggs, wood, and honey. This change occurring in these markets will impact the NZD price. 

Due to this difference between NZD/JPY, this currency pair is considered as one of the Forex pairs with high volatility. 

USD/ZAR (Currency Pair)

This currency pair consists of the US dollar as the base currency, Whereas the South African rand is situated on the quote currency position. This forex pair volatility should be highly affected by the value of gold which is directly connected with the weakness or power of the USD. 

The resultant of this is If the cost of gold increases, the value of the Dollar may also rise against the South African rand. This is beneficial for South Africans because they will receive more dollars in exchange for their gold across the globe.

Therefore, it may also have drawbacks that make it more expensive to purchase US dollars in exchange for ZAR. So traders who are going to trade USD/ZAR need to keep a close eye on the prices of gold. 

CAD/JPY (FX currency pair)

This pair consists of the Canadian Dollar against the Japanese yen. This is one of the safest forex currency pairs because this pair consists of the Canadian Dollar, which is a commodity currency. The value of this forex pair will highly get affected by the cost of oil-based on the commodity market. 

Including the oil is majorly imported by Japan, which that indicates, if the price of oil rises, the price of purchasing Canadian Dollar against yen will also move towards increment. 

This happens because when oil prices increase, more yen should be changed into CAD for purchasing one barrel of oil. Because of this reason, the cost of CAD/JPY automatically increases. This is the reason why CAD/JPY hold a position in the list of Forex pairs with high volatility

Forex Pairs USD/KRW

This forex pair has the US dollar as the base currency, and the South Korean won as the quoted currency. The South Korean won is not one of the old currencies. It was introduced in the market after the partition of the Korean peninsula, which took place during the Second World War. 

After the separation, South Korea amalgamated with America and The other part of Korea corporate with Russia. Resultant of this. Both parties face economic separation of communism and capitalism is becoming proof, and this can be still appearing on the peninsula. 

This is the main reason why this currency pair consists of high volatility. Still, the KRW should be traded nearly 1000 to one against the US dollar because it influences price movement and exchange rate. Traders can use this to make a significant profit in the forex market. 

FX currency pair USD/TRY

USD/TRY consists of the US dollar against the Turkish Lira. TRY holds the highest volatility in the market from 2016 after the succeeding “purges” and the failed “coup d’etat”, which are making their place in Turkish society. 

Still, the political history of Turkey is not completely stable. There are so many people who support “the Peace at Home Council”, which is a community of people who are responsible for the failed coup. Because of all these factors, USD/TRY forex pairs make their name in the list of Forex pairs with high volatility. 

Conclusion:

Now you have a list of Forex pairs that consist of high volatility. Traders who are going to trade currency pairs must check the role of volatility in the price movement of currency pairs. Here we provide you with complete details about Forex pairs with High volatility. Learn how to trade currency pairs to make a significant profit using volatility. 

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