Fast-moving markets require constant monitoring, which can be mentally exhausting and lead to impulsive decisions. Low volatility in Forex is determined by the stability of the economies of countries and resistance to various kinds of shocks. Another option is that one of the currencies is steadily depreciating relative to the second. One of the frequently used tools for trading on short-term fundamental volatility is the Nonfarm Payrolls report. You can find out how to make money on it in the article What is the Non-Farm Payrolls Report in Forex. The New Zealand dollar, closely tied to the Australian economy, has exhibited similar volatility to the AUD, with an average volatility of 9.5% over the last three years.
- Digital platforms such as Octa Nigeria provide traders with access to a large number of forex pairs and tools to analyze volatility and price movements in real-time.
- Known as ‘the Dragon’ due to its aggressive price movements, the GBP/JPY pair is highly volatile.
- Online trading platforms have emerged to prominence over the past decade…
- As a first step, become familiar with the forces driving these currency price fluctuations – whether they are geopolitical turmoil, or changes in economic data or market sentiment.
- Trading cross-rates is more difficult compared to major currency pairs.
This comprehensive guide will examine the most volatile forex pairs, backed by real-time market data and expert insights. We’ll explore why certain currency pairs exhibit higher volatility and how traders can effectively capitalize on these movements while managing risks. While volatile currency pairs can offer higher profit potential, they also come with increased risk. They’re more suitable for experienced traders who are comfortable with fast market movements.
Time your trades
When it comes to trading forex, you can’t avoid uncertainty and volatility. But if you are well-prepared, you may be able to find opportunities to take advantage of market changes. Traders must watch for global headlines and Russian central bank interventions because sudden policy shifts can lead to big gaps or spikes. At the first candlestick with an abnormally large body, the channel expands, its borders are broken, and the standard deviation grows. A wise Forex trader closes a long position in advance without waiting for the stop loss to trigger at the second candlestick. WR Trading is not a broker, our virtual simulator offers only simulated trading of a demo account.
- Traders favor volatile pairs for short-term trading strategies like day trading and scalping, as bigger price swings allow for larger profit targets.
- To overcome this unpredictability, traders need to cultivate flexibility in their approaches while closely monitoring fluctuations in market sentiment indicators.
- Adjusting your strategy based on these insights helps you stay profitable and adapt to changing market environments.
- When trading volatile forex pairs, it is imperative to prioritize implementing stringent risk management measures.
Market
Digital platforms such as Octa Nigeria provide traders with access to a large number of forex pairs and tools to analyze volatility and price movements in real-time. Understanding which pairs are volatile can make or break your approach, whether most volatile currency pairs you are a trader or a long-term holder. Volatility is influenced by factors like economic data, interest rate changes, geopolitical tension, and market liquidity. Emerging market currencies or cross-pairs often show higher volatility.
What are the most volatile currency pairs?
It is easiest to trade currency pairs with low volatility, the quotes of which depend on a smaller number of fundamental factors. Such pairs should not have sharp price jumps, deep drawdowns, or abnormal peaks. It is highly desirable that assets show short or long-term trends and have high liquidity.
Commodity Outlook: Commodities rally despite global uncertainty
These rankings are based on recent years’ data, and volatility can vary widely in the long term. Foreign exchange markets and exchange rates are affected by numerous factors including interest rates and geopolitical events. Traders should regularly monitor volatility levels and adjust their trading strategies accordingly.
Creating a watchlist involves compiling a list of currency pairs that you are interested in trading or have potential for based on your analysis. This allows you to focus your attention on specific pairs and monitor their movements more effectively. We want to clarify that IG International does not have an official Line account at this time. We have not established any official presence on Line messaging platform.
Risk Management Guidelines
Staying ahead of such uncertainty requires continuous learning about global events and having access to real-time news updates and relevant data streams that will enable swift response when needed. Momentum indicators such as the Relative Strength Index (RSI) and Stochastic Oscillator are commonly utilized by traders to determine whether markets are losing momentum or gaining strength. This involves opting for smaller positions representing only a fraction of the total account balance per individual trade, thus minimizing potential losses. They note that higher ATR readings signify a greater potential for significant price fluctuations. Furthermore, geopolitical conflicts or political instability often trigger safe-haven currencies’ ascendancy while those deemed risky decline in value. The Rand’s importance as a major producer of gold means changes in its price also hold weighty consequences.
Typically, statistical tools such as standard deviation and indicators like ATR (Average True Range) are used to measure volatility, accurately reflecting the price dynamics and movement. In 2025, rate increases in the UK and commodity prices in New Zealand add to volatility. This pair presents many opportunities but demands discipline in sizing of positions and placement of stop-loss orders. Commodities, such as iron ore, shift Asian market sentiment and trigger big intraday moves in the market.
With average daily ranges of 350 pips, prices can catapult higher or lower very rapidly. Featuring two currencies with vastly differing volatility levels, EUR/NZD is another favorite of active traders. The Euro is stable and lower volatility against the New Zealand Dollar, which is more volatile with exposure to commodities and emerging markets. Conversely, the Japanese yen is widely considered to be a safe-haven currency, meaning that investors often turn to it in times of economic hardship – something which they do not do with the Australian dollar. “The key to surviving volatile markets isn’t predicting movements, but managing risk,” as I often remind my trading students. Also, major news about economic changes or government policies will affect investors’ sentiments.
You will also learn how this indicator could be used in trading and risk management. The pair’s volatility is heavily influenced by oil prices, given Canada’s position as a major oil exporter, while simultaneously responding to global risk sentiment through the Yen component. Trading activity peaks during North American sessions when Canadian markets are most active, though the pair can show substantial movement during Tokyo hours as well. The interplay between energy markets, risk appetite, and monetary policy decisions from both the Bank of Canada and the Bank of Japan creates a complex but tradable volatility profile.
If you want to trade one of the most volatile currency pairs, you can open an FXOpen account and start today. In contrast, New Zealand heavily depends on commodity exports, and its currency is also affected by the prices of agricultural products like milk, eggs, meat, and timber. As a result, the NZD/JPY market is experiencing large price fluctuations, which makes it one of the most volatile pairs in forex.