While choosing a currency pair, you must check a few factors, like volatility. Volatility will not be the same in all the currency pairs. Some are the best volatile forex pairs, and there is a reason for it.
Volatility in the finance market means the frequency and strength of price change. An asset is highly volatile Forex Trading pairs. If the asset price is small, they say the price doesn’t change over time.
The volatility of a currency pair depends upon the volatility of its base and quoted currencies. Its price changes a lot within a given period. Price moves in various triggers. Understanding the concept of volatility and market reactions can improve your results.
In this article, you will learn more about forex volatile pairs and some of the most volatile forex pairs available.
Table of Contents
Volatile Forex Pairs
The more volatile pairs give you more profit or bigger losses. So, it would help if you carefully choose forex pairs to avoid highly volatile forex pairs. Volatility creates an unstable environment and is a headache for governments. Economic hardships can make specific forex pairs incredibly volatile.
The volatility is used to evaluate the potential for variation of a forex pair. It fixes the levels of objectives or a stop-loss. In an intraday objective, at 2 or 3 times the volatility may be a risky strategy. Also, there is an estimation that an objective of being very less volatile has more chance of being achieved.
If you are new to forex trading, there are several things that you may not be familiar with. You need to get the fundamentals right before starting with forex training online. That includes learning about the forex pairs.
Things you should know about the forex pairs:
- Highly volatile currencies have less liquidity and higher spreads.
- Volatility increases during political news and economics.
- Leverage and the currency pairs you are trading in.
- High risk occurs in highly volatile pairs.
- Should know forex trading strategies and the significance of the bid-ask spread.
- Strong economics are stable currencies.
- Need to have a trading plan in a well-informed manner.
Top 5 Volatile Forex Pairs In Forex
#5 NZD/JPY
New Zealand is also a commodity-based currency, with its values mainly tied to exports of dairy products, honey, meat, wood, and eggs. They are sensitive to these markets. When these products change in price, it affects the NZD/JPY volatility levels. The relationship between New Zealand and Japan is similar to AUD/JPY.
#4 CAD/JPY
There is an inverse relationship between the Japanese Yen and the Canadian Dollar. CAD is also a commodity currency crucial to monitor the oil markets, which can cause sudden price fluctuations. When this price increases, the cost of CAD with JPY also increases.
They both are very sensitive markets. The important note is that the Canadian dollar reflects its oil exports, so any changes in supply or demand will increase or decrease the CAD. Because oil is a volatile asset, it influences the Canadian Dollar.
#3 AUD/JPY
One of the most volatile forex pairs is the Australian Dollar and Japanese Yen. Commodity currencies are the most volatile on the market. Investors use JPY to bring stability to their risk portfolio because the Yen is the least volatile currency.
This is highly volatile thanks to its inverse relationship between AUD and JPY, which gives you high volatility, making it a popular choice among traders looking at price fluctuations. This forex pair is sensitive to the market.
#2 USD/KRW
The US Dollar and South Korea have a highly blown-up exchange rate. Price fluctuations are common. Many investors look into these volatile forex pairs to be an easy win. The greater volatility becomes when more people trade USD/KRW.
#1 USD/BRL
US Dollar and Brazilian Real currency cross. The Brazilian real is an exotic currency which means it arrives from an emerging market. They are highly volatile. Forex pairs, which include an exotic currency, are generally volatile too. It performs during the Newyork session and the Asian session.
It has exciting growth of the economy as an emerging market which leads to volatile currency pairs. Many investors have deliberations about the reality. Yet, Brazil is politically unstable through corruption in government.
Must Used Volatile Forex Pairs That Make Trade Succesful
The forex investors seek to outperform the market and are not hesitant to invest with high volatility pairs. Finding the most volatile forex pairs in the market is not difficult. According to the top volatile currency pairs graph, here is the list of the most used and the best volatile forex pairs that make trade successful.
- USD/TRY
- USD/MXN
- USD/NOK
- USD/PLN
- USD/HUF
- AUD/USD
- NZD/USD
- GBP/USD
- USD/CHF
- EUR/USD
List Of Most Volatile Forex Pairs
The most volatile forex pairs are exotic currency pairs, which include one or two currencies of emerging markets. Eg: USD/TRY, USD/MXN, USD/ZAR, etc. They are identified by low trade volume and extremely risky to high volatility. Given below is the list of most and the best volatile forex pairs.
- AUD/JPY (average volatility – 1.12%).
- AUD/USD (average volatility – 1.07%).
- NZD/JPY (average volatility – 1.05%).
- EUR/AUD (average volatility – 1.07%).
- GBP/NZD (average volatility – 1.05%).
- GBP/AUD (average volatility – 1.05%).
Conclusion – Forex Trading Competition
For a beginner, it must be quite challenging to trade volatile forex pairs as they are risky. However, you can use the strategies and tips to prefer volatile pairs. This article shows you the best volatile forex pairs and the most used and highly volatile forex pairs. Understand the depth of the volatile pairs.
Try a few strategies like scalping, swing trading, day trading, and price action that can be implemented in the financial markets. Also, understand the difference between the highly volatile and low volatile forex pairs. You must understand these concepts to minimize your losses.
