What Are the Most Commonly Traded Currency Pairs?

Most major currencies only trade in a range of a few percent within a trading day. But, non-major currency pairs experience lower liquidity, which means the difference between intraday highs and lows tends to be wider. We see this when looking at the percentage range between different major, cross and exotic pairs. Market volatility is the rate at which an asset’s price increases or decreases over a period of time.

It usually makes sense to take a currency pair’s volatility into account when trading since it provides a measure of the risk involved. Traders can take larger positions in more stable pairs and smaller positions in more volatile pairs as part of the position sizing method used in their forex money management strategy. You can readily determine which pairs are more volatile and which are more stable by using a volatility calculation tool. Learn how to trade the forex market and continue by reading the articles what is forex trading and how does it work and best forex indicators. The 10 most volatile forex pairs of 2020 have therefore been divided into two groups below that correspond to majors and minors.

How to spot trading opportunities in high volatility

NZD/USD. This currency pair sets the currency of New Zealand against the US dollar, and it is referred to as the kiwi dollar. AUD/USD. This currency pair sets the US dollar against the Australian dollar and is referred to as the Aussie dollar. USD/CHF. This currency pair sets the US dollar against the Switzerland currency. CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.

We’re also a community of traders that support each other on our daily trading journey. Trends can sometimes reverse at the end of the London session, as European traders may decide to lock in profits. Volatility tends to die down in the middle of the session, as traders often go off to eat lunch before waiting for the New York trading period to begin. Type in the volatility criteria to find the least and/or most volatile forex currencies in real time.

You should consider whether you understand how this product works, and whether you can afford to take the high risk of losing your money. They are the currency pairs which have historically been the most popular among traders. A definitive list of the most volatile currency pairs is hard to collate, chiefly because volatility can affect different currency pairs at different times. This is because of the previously-mentioned factors, which can cause the price of a currency pair to rise or fall. However, some currency pairs have had historically high volatility. When more than one market is open at the same time, this increases trading volume and adds volatility which is the degree to which equity or currency prices change.

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The key thing to note is that the Canadian dollar reflects its oil exports, so any cuts in supply or demand will increase/decrease the CAD. Increasing interest rates sporadically to control inflation in the UK. The GPB is very sensitive to any significant decisions or votes in the House of Commons. Major geopolitical activities in Europe can also have a substantial impact on the volatility of the pair. The US-China trade relationship has been a volatile one in recent years, providing USD/CNY traders with plenty of speculative opportunities. She holds a Bachelor of Science in Finance degree from Bridgewater State University and helps develop content strategies for financial brands.

• As for the slowest-moving pair, it was almost universally USD/CAD, closely followed by USD/CHF.
• “The Chunnel” is a combination of the Euro and the British pound sterling, a play on words for the Channel Tunnel that connects both continents.
• Some of the top exports from New Zealand are dairy, eggs, meat, wood and honey.
• Like AUD/JPY, the New Zealand Dollar against the Japanese Yen can also be volatile.

If you are considering trading currency pairs overnight, we recommend that you always do your own research before risking any money. Only you can identify what are the best currency pairs to trade at night that are suitable for your trading strategy. It’s important to note that exotic currency pairs may be less liquid and more difficult to trade than major or minor pairs, and they may also carry additional risks.

It’s a quick and risk-free way to master trading in the most liquid financial market. A practice account will help you learn trading basics and develop a strategy before investing money. With that being said, the won currently trades at around 1000 to one against the US dollar. Because of this inflated exchange rate, price movements in the USD/KRW pair are common, and many traders look to this pair as a way to make a quick profit.

GBP/USD​

The most recent one month historical volatility percentages are displayed after each currency pair’s codes for comparison purposes. Below find a list and descriptions of the top five minor currency pairs ranked by historical volatility. They are more volatile compared to the major fx-pairs floor trader pivots ranked on #6 to #10. Central banks are created to control inflation by providing stable currency. When inflation increases too much, central banks decrease the supply of money by increasing interest rates. In short, economic hardships can make certain currencies incredibly volatile.

To calculate historical volatility yourself, you can use online tools like a forex volatility calculator to determine the historical volatility of a currency pair over a given number of weeks in the past. A sample output from that tool for EURUSD volatility over forex hedging techniques 52 weeks appears below. It shows how volatility in that pair varied over the time frame analyzed, as well as by hour and trading day. This sort of analysis can be useful if you wish to determine when a currency pair is typically most volatile and to what extent.

“The Cable” is a combination of the British pound sterling and the US dollar. This is seen as a particularly volatile currency pair, due to its frequent fluctuations in price, exchange rate and pip movements. This can result in large profits if the trader is successful, however, it can result in equally great losses when market volatility is at a high. The GBP/USD is particularly favoured by day traders​, who aim to take advantage of price fluctuations by dipping in and out of the market at a quick and precise pace. For this reason, it is also one of the best forex pairs for swing trading​, another short-term forex strategy.

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They do this by using an option pricing model to compute implied volatility from the current exchange rate, other market observables and the option’s parameters. This pair consists of the U.S. dollar quoted versus the Mexican peso. Due in part to the country’s slow response to the COVID-19 pandemic, Mexico’s economy is forecast to contract by 9% in 2020. As for day traders, scalpers, and high-frequency traders, high volatility is essential as it brings more trading opportunities.

Explore the most popular forex pairs with CMC Markets

We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy. Throughout 2022, the USD showed significant strength versus the majors. In fact, the US dollar Index rose more than 14.5% over the first eight months of the year. Large one-month moves included a 4.87% rise in April and 2.80% rally in June.

The most common of them are day trading, scalping, price action, swing trading, etc. Each of these strategies can be implemented, given the market is volatile. This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a difference between database and data warehouse record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information.

As it is possible to trade all currencies around the clock, the best currency pairs to trade at night depend on the individual risk tolerance of the trader and their preferred trading strategy. Trading forex overnight presents opportunities for both long-term investment strategies as well as short-term strategies like scalping. A highly liquid market simply means that there are lots of buyers and sellers and you can trade your assets very quickly.