Most Volatile Currency Pairs
The currencies traded the most globally come from all over and are used by some of the biggest countries. These are the big forex pairs, haven currencies, and currencies with stable trade links. This piece tells you about the five currency pairs that are traded the most on our site. The foreign exchange market constitutes the biggest and busiest market in the world. It lets you trade major, small, and strange currencies between countries. Because of this, there are different exchange pairs to sell on the market.
Which currency pairs are the most profitable?
Determining the most profitable currency pairs depends on various factors, including market conditions, economic indicators, and trading strategies. Currency pair profitability is subject to constant change due to fluctuations in exchange rates. While some traders find success with major pairs like EUR/USD or GBP/USD, others may prefer exotic pairs such as USD/ZAR or USD/TRY. Ultimately, profitability in forex trading requires thorough analysis, risk management, and a well-executed trading plan. Consult with a financial advisor or engage in comprehensive market research to identify potentially profitable currency pairs for your specific trading approach.
What are Currency Pairs?
Currency pairs show how much one currency is worth compared to another. They have a base currency and a secondary price currency. One example is the EUR/USD, which is probably the world’s most commonly traded currency pair. Its price shows how much the price of the quoted currency, the US dollar, is needed to buy one unit of the base currency, the Euro.
Each pair of currencies has a bid price and an asking price. The bid price is the most a buyer is willing to pay for a currency. The asking price is the lowest a seller will take for a currency. The bid-ask spread is the variance between the bid and ask prices for the two currencies.
Forex traders sometimes like trading on currency pairs with a smaller or tighter spread because it lowers the overall costs of the trade. But some traders like to trade on unstable currency pairs with bigger spreads and less volume to make money from the changing price gaps.
Most popular currency pairs for beginners
Because of this, the USD is used as the base or quote currency in most important forex trades. When added to other currencies from China, Japan, and the UK, some of the world’s biggest countries, these are called “major crosses.”
Major forex pairs are especially appealing to traders because they represent the world’s safest and most successful economies. Traders can also take advantage of their low spreads, which align with the market value. Major forex pairs are often the ones that newbies trade the most.
The USD/ZAR currency pair is commonly referred to as the “Dollar-Rand” or “US Dollar-South African Rand. USD/ZAR represents the exchange rate between the United States Dollar (USD) and the South African Rand (ZAR). In forex trading, it shows how many South African Rands are needed to buy one US Dollar.
- Minimum spread: 75.4 points
- Margin rate: 25%
USD/JPY
“The Gopher” mixes the US dollar and the Japanese yen. It is one of the most common fx pairs because the JPY is used a lot in Asia, and the USD is used worldwide. It has high liquidity, which means that traders can buy and sell big amounts of the pair without the exchange rate changing too much. It also has one of the smallest spreads on the foreign exchange market, which lowers the total cost of trading.
- Minimum spread: 0.7 points
- Margin rate: 3.3%
EUR/USD
“The Fiber” mixes the US dollar and the Euro. This is usually considered the most traded pair of currencies because it comprises two of the world’s biggest and most trusted countries. Like the USD/JPY, this currency pair has very low spreads, a lot of buyers and sellers, and the ability to trade big amounts.
This is among the most desirable currency pairs for fx trading because the markets are mostly stable year-round. Because of this, it may be one of the best currency pairs for making smaller, more frequent profits.
- Minimum spread: 0.7 points
- Margin rate: 3.3%
GBP/USD
“The Cable” combines the US dollar and the British pound sterling. This is seen as a risky currency pair because its price, exchange rate, and pip moves change significantly. If the seller is good, they can make much money from this.
But when the market is very volatile, it can lead to just as big losses. Day traders like the GBP/USD because they can get in and out of the market quickly and accurately to take advantage of price changes.
Because of this, it is also among the best forex pairs for swing trading, which is another short-term forex technique. Before starting any accounts, people who want to trade this risky currency pair should learn more about basic research of the market.
- Minimum spread: 0.9 points
- Margin rate: 3.3%
EUR/GBP
“The Chunnel” is a play on terms of the Channel Tunnel, which crosses Europe and the United Kingdom. Most people think this currency pair is very strong because the two countries are close together and have always traded. Due to the effect of Brexit on the economy, the fx pair has become more unpredictable over the past few years, which can be very appealing to traders who know what they are doing.
Changes in interest rates, which regional banks reveal, also affect the exchange rate. This means that one currency can quickly become stronger than the other, leaving the pair much more unpredictable. This is also true for all the other currencies on this list.
- Minimum spread: 1.1 points
- Margin rate: 3.3%
USD/CHF
“The Swissie” mixes the US dollar and the Swiss franc. For many years, buyers on the forex market have used Switzerland’s stable economy as a “haven” by buying the CHF when the market is unstable. So, when an area’s economic or political situation is unclear, this is a popular fx pair for traders.
As more money is invested, the value of the CHF goes up against the USD. As a result, this currency pair’s value starts to decrease. Even though it is among the safest currency pairs for trading and has many perks because of that, when markets are more stable, buyers may be less interested in the USD/CHF and instead choose one of the other big currency pairs on this list.
- Minimum spread: 2.5 points
- Margin rate: 3.3%
Visit our page on Forex dealing to see a full list of the currency pairs we offer, along with their minimum spreads and borrowing rates.
Conclusion
In conclusion, there is no definitive answer to which currency pairs are the most profitable. Profitability in forex trading depends on various factors, including market conditions, individual trading strategies, and risk management. Traders should conduct a thorough analysis, stay updated on economic indicators, and develop a well-executed trading plan to identify potentially profitable currency pairs. Remember to exercise caution and seek guidance from financial professionals to make informed trading decisions.
F.A.Q
Volatile currency pairs are currency pairs in the foreign exchange (forex) market that experience significant price fluctuations over a short period. They have a higher level of price variability and can exhibit rapid and substantial price movements.
Currency pair volatility can be influenced by various factors, including economic indicators, geopolitical events, market sentiment, interest rate differentials, and liquidity. Different countries’ economic conditions and market dynamics can lead to varying degrees of price fluctuations in their respective currencies.
As market conditions change, the most volatile currency pairs can shift, but historically, some of the most volatile ones have included:
- GBP/JPY (British Pound/Japanese Yen)
- EUR/JPY (Euro/Japanese Yen)
- AUD/JPY (Australian Dollar/Japanese Yen)
- GBP/USD (British Pound/US Dollar)
- USD/TRY (US Dollar/Turkish Lira)
- USD/ZAR (US Dollar/South African Rand)
- USD/BRL (US Dollar/Brazilian Real)
- USD/MXN (US Dollar/Mexican Peso)
Traders can manage volatility by employing various strategies:
- Using appropriate position sizing to limit potential losses in highly volatile markets.
- Setting stop-loss orders to protect against adverse price movements.
- Utilizing technical and fundamental analysis to identify potential entry and exit points.
- Staying informed about economic events and news that could impact the currency pairs being traded.
- Diversifying their trading portfolio to reduce exposure to any single volatile currency pair.
Yes, certain events and trading sessions can contribute to increased volatility. Major economic releases, central bank announcements, geopolitical developments, and unexpected news can lead to sudden shifts in currency pair prices. Additionally, trading activity tends to be higher during overlapping trading sessions, such as when the London and New York sessions coincide.
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Written By: Allen Matshalaga
Allen is a professional forex trader, blogger, and online enthusiast who spends most of his time testing and reviewing legit ways of making money online and is determined to help others succeed.