Exotic Currency Pairs

[Mark Dahl]

Exotic currency pairs are risky for forex trading because the volatility is higher for these pairs.

 

[Eduardo Lucchese]

Just in case few traders may not know what are Exotic currency pairs:

Exotic Currency Pairs

The exotic currency pairs, or the exotics, are the currency pairs that are comprised of the most important currency in the global markets—the U.S. dollar (USD)—crossed with any currency that is not considered a major currency. Exotic currencies—like the Swedish krone (SEK), the South African rand (ZAR), or the Mexican peso (MXN)—are called exotic because they are associated with illiquid currencies that might not be available in a standard trading account.

Exotic currencies are usually lightly traded and have large bid/ask spreads. However, many so-called “exotic”currencies are becoming more popular and more and more investors are trading them.

Take a look at the following list of exotic currency pairs because you may be interested in diversifying your forex portfolio with a few uncorrelated currency pairs:

USD/SEK (U.S. dollar / Swedish krone)
USD/NOK (U.S. dollar / Norwegian krone)
USD/DKK (U.S. dollar / Danish krone)
USD/HKD (U.S. dollar / Hong Kong dollar)
USD/ZAR (U.S. dollar / South African rand)
USD/THB (U.S. dollar / Thai baht)
USD/SGD (U.S. dollar / Singapore dollar)
USD/MXN (U.S. dollar / Mexican peso)

Major Currency Pairs

EUR/USD (Euro / U.S. dollar)
GBP/USD (British pound / U.S. dollar)
USD/CHF (U.S. dollar / Swiss franc)
USD/JPY (U.S. dollar / Japanese yen)
USD/CAD (U.S. dollar / Canadian dollar)
AUD/USD (Australian dollar / U.S. dollar)
NZD/USD (New Zealand dollar / U.S. dollar)

It's the most correct and informative about Exotic Paris. Eduction resource credit to TradeMentor - saxobank.com

Very nicely explained. thank you for the information.

 

[Alexander Hudson]

Some currency pairs are so fluctuating that they are very risky to trade.

 

[fxgeek]

I always wanted to try out something more in exotic pairs, does any one have any recommendations to pick one?

 

[skihav]

Exotic pairs are extremely volatile and less liquid, compared to major pairs. They are difficult to trade and are expensive because of the large bid-ask spread. They are also difficult to predict, and traders have to use high leverage to win profits, which can be quite risky.

 

[Gallimaufry]

Exotic pairs are extremely volatile and less liquid, compared to major pairs. They are difficult to trade and are expensive because of the large bid-ask spread. They are also difficult to predict, and traders have to use high leverage to win profits, which can be quite risky.

Despite all this there are many traders who trade exotic currency pairs and the liquidity has increased with the increase in the number of traders trading them. And they take volatility as an opportunity to gain profits.

 

[Karley Walker]

Major pair is very interesting to me and it is possible to be very profitable by trading here.

 

[Kazumu Fukunaga]

Some currency pairs are so fluctuating that they are very risky to trade.

Interest rate is important for a currency. Changing in interest rate can change the market trend. Traders should be watchful if rate is changed.