Top 10 Most Volatile Forex Pairs to Trade in 2025
If there is no one to sell the purchased asset and you need to greatly reduce the price in order to get rid of it, then the asset is considered illiquid. Exotic currency pairs are instruments with low liquidity, while volatile major currency pairs are highly liquid. However, the fundamental factors could disturb the balance of supply and demand. Before we delve into the rankings, let’s first understand how volatility is measured.
- More precisely, the value of one nation’s currency is plotted against the other.
- Trading Forex, Futures, Options, CFD, Binary Options, and other financial instruments carry a high risk of loss and are not suitable for all investors.
- It has also seen substantial price fluctuations, depreciating by over 20% against the US dollar and exhibiting a high-to-low range of nearly 50%.
AUD/NZD
- Suppose these patterns play out over several days or weeks and eventually reach their price objective.
- This set up a situation where inflationary trends took hold of many economies worldwide, and inflation levels hit sky-high levels that had not been seen in two or three decades.
- The latter is especially important as a trading account that is not properly risk-managed will not survive the wild swings of these currency pairings.
- If your position goes against you, you may receive a margin call, meaning the equity in your account has fallen below the minimum required.
- The Turkish lira keeps experiencing devaluation pressures and this makes EUR/TRY a favorite for traders looking for volatility.
The most traded forex pairs, typically involve currencies from the world’s largest economies and financial centers. Understanding key details about the most traded forex pairs is fundamental for traders to effectively navigate the dynamic currency markets. Continuously monitor your selected forex pairs and adapt to changing market conditions. Stay informed about economic developments, news events, and technical signals that may affect currency movements. Be prepared to adjust your trading approach as needed based on new information and market dynamics.
For example, negative statistics on inflation came out in the USA – investors switched from the dollar to the British pound. As a result, the pound rose in price against other currencies, although there were no reasons for this in the UK itself. Traders may also choose to trade non-USD pairs such as AUD/JPY, NZD/JPY and CAD/JPY that can experience higher volatility than major currency pairs, though often risking lower liquidity. Analyzing standard deviations as well as trading volume are essential to understand the liquidity-volatility balance, especially in exotic currency pairs. To trade volatile forex pairs with high rewards, focus on a conservative risk management approach, such as risking no more than 2% of your capital per trade.
The Factors that Influence Forex Volatility
For the beginners, education and a clear strategy are absolutely essential. Platforms that provide quality data, educational tools, and solid risk management capabilities can make all the difference. In 2025, its volatility will be influenced by most volatile currency pairs global inflation, commodity cycles, and developments in the Asian market. It’s a duo that pays traders who watch both macro trends and daily price action. However, this will also make it more expensive to buy US dollars with South African rand. Because of this, traders who are interested in the USD/ZAR pair should carry out sufficient analysis on the price of gold and the factors which affect its price before opening a position.
The pair is influenced by monetary policy decisions from the European Central Bank (ECB) and the Bank of Japan (BoJ), as well as global risk sentiment. Events like ECB rate hikes or Japanese GDP releases can create significant trading opportunities within this pair. Nicknamed “The Dragon” for its wild price swings, the GBP/JPY pair is highly sensitive to economic and political developments in the UK and Japan. The pair’s volatility is often linked to risk sentiment, as the Japanese Yen serves as a safe-haven currency while the British Pound reacts strongly to geopolitical events like Brexit negotiations. For instance, during the height of Brexit uncertainty, GBP/JPY experienced massive intraday fluctuations, making it a favorite among experienced traders seeking volatility. Remember, successfully trading volatile currency pairs comes with experience.
Indeed, the range of exotic pairs’ movements is much broader than that of the major ones. However, such high volatility results from low liquidity, and trading the low liquidity currency pairs carries particular risks for a trader. The most volatile forex pairs by percentage in the last several years are USD/RUB, USD/TRY, USD/BRL, USD/ZAR, USD/SEK, and AUD/JPY.