Exotic currency pairs

Whether you’re trading forex, indices, commodities, or cryptocurrencies, position sizing can help take your trading to the next level. Try to learn as many different trading strategies as you can and spend your time focusing on a single currency until you are well-equipped, before branching out into the unknown. ATFX is a trade mark of AT Global Markets INTL LTD a company registered in Mauritius under FSC and all services in the Hashemite Kingdom of Jordan is offered through its Introducing Broker.

  • Exotic currency pairs typically include one major currency paired with a currency from a developing or emerging country.
  • Currency trading has been around for centuries, but the rise of digital currencies has brought new opportunities and challenges to the market.
  • Your strategy and choice of markets is entirely up to you and you can execute your deals using our flagship Trading Station platform or the likes of MetaTrader 4.
  • Using an Electronic Communication Network enables them to place the order directly into the market where we have huge investors bargaining at the same time, therefore reducing slippage.

Currencies exchanged on the Forex market are known as fiat currencies and, even in the case of the US dollar, have depreciated in value over time. The major world currencies can be defined by the height and frequency of their trading volume. Those with the highest average trade volume are widely accepted as the major world currencies. Trading exotic currencies demands deeper market study to understand the movement patterns of the currencies. FXCM Markets is not required to hold any financial services license or authorization in St Vincent and the Grenadines to offer its products and services.

Forex Explained – What Are Exotic Forex Pairs?

Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here. Hopefully, this article helped to shed some light on what exotic forex pairs are and whether you should consider trading them, especially after considering all of the important factors mentioned before. Like scalping, day traders will also use technical analysis unless a sudden geopolitical event comes to light. Day traders trade positions within the day and don’t typically hold positions overnight. They also require generally fast execution and low commissions to make a profit from their trades which can sometimes result in a loss. All investors should seek advice from certified financial advisors based on their unique situation before making any investment decisions in accordance to their personal risk appetite.

  • Currencies of emerging markets provide higher interest rates for holding positions overnight.
  • An exotic pair crosses the significant currencies with any other currency from the developing countries.
  • A currency pair such as the USD/SEK consists of the base currency on the left (in this case, the US dollar) and the quote currency on the right (in this example, the Swedish krona).
  • The exoticism of a forex pair is in no way a reflection of the relative price of the currency or state of the economy of the country to which it belongs.

Quantitative data helps identify an impending reversal, signalling to close the position. Stop loss and trailing stop loss are effective risk management techniques when trading exotic forex pairs. Additionally, setting the take profit limit helps traders book profits before the trend reverses.

Scalping Trading

Countries that are in or close to Europe are generally traded against the Euro, while other exotic currencies would be traded against the USD. Examples would include EUR/TRY (Euro/Turkish Lira) and USD/ZAR (US Dollar/South Africa Rand). One other thing to keep in mind when trading exotics is that they are far less liquid than majors and have higher volatility too. It seems that currency, or more widely money, must act as a medium of exchange in addition to a store of value.

Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. A currency pair is a term used in the foreign exchange (forex) market to describe the relationship between two currencies, and how they can be traded against each other. Exotic forex pairs do not have a very high correlation with global macroeconomic events or even with traditional instruments like equities and bonds. This is where traders aim to capitalise on an opportunity by anticipating a future shift in pricing trends.

Trade Minor Forex Pairs With Top Brokers

The analysis can be a mix of technical and fundamental analysis as both can affect the pricing in this time frame. As the positions are only entered and exited once in a while, this can be a practical trading style for FX traders looking to enter the forex market part-time. When creating a live trading account with Axi, you get access to MetaTrader 4 and over 40 currency pairs to trade. To get started trading currencies, check out our guide on how to trade forex. One of the most important aspects of trading forex is understanding currency pairs.

Exotic currency pairs

They involve one major currency (currencies belonging to the G7 nations) and a currency of a developing nation. Despite the low volume, exotics are a popular forex trading asset among some traders. Read on to find out what drives them and some strategies that help trading exotic currencies. The majority of countries in the world have their own currency, but the unique economic conditions of each country can vary dramatically. For example, the US is an economic powerhouse compared to, say, a developing country such as Uruguay.

What are the Major World Currencies?

Exotic currency pairs can be traded at any forex broker, with some brokers offering a larger variety than others. With Axi, you can trade over 40 exotic currency pairs with spreads ranging from 1.2 to 189. Given the delicate nature, ECN brokers such as ATFX are the best option for trading as they offer the lowest spread. Using an Electronic Communication Network enables them to place the order directly into the market where we have huge investors bargaining at the same time, therefore reducing slippage. There are several exotic currency pairs provided by ATFX and is readily available for investors to trade. Breakout traders often combine technical and fundamental analysis techniques to identify the potential and signals of a foreign exchange pair being ready to break out of a range.

Gold Articles

Any projections or views of the market provided may not prove to be accurate. Blackwell Global assumes no liability for any loss arising directly or indirectly from use of or reliance on such information herein contained. Forex trading with exotic currencies is possible either by directly trading the currencies or via derivatives like CFDs. Direct trading requires higher upfront capital, while CFD trading is possible with lower capital, as leverage reduces the entry barrier. However, traders must be cautious as leverage can amplify both the potential profits as well as losses.

These pairs can also feature an exotic against an exotic, such as the Turkish Lira (TRY) and Singapore Dollar (SGD). In the above example, GBP would be the base currency and USD would be the quote currency. In this article, we will list all the exotic currencies available to trade in the foreign exchange market and describe what makes these coins attractive for traders.


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