Most Volatile Active Traded Currency Pairs

The picture below shows the most volatile active traded currency pairs sorted by average daily trading range.



If we developed a strategy, tested it for example on EUR/USD, USD/JPY and EUR/SEK and saw that USD/JPY seems to respond better and generate more profit, then we must give this pair priority, at least for as long as we follow this strategy. It is a simple obvious fact, but one that requires discipline and patience: if we decide to trade only, say, USD/JPY signals, then our trading must reflect this decision.

Never go for impulses like: “come on, let’s go crazy for once, let’s trade a new pair and see what happens”. Demo accounts may be appropriate for this kind of approach, live accounts are not… Trading is not for those looking for a thrill, but for educated and organized individuals who are ready to treat it seriously.

The coherence of our strategy (based on extensive testing on several pairs) should be the most important factor when deciding which pairs to trade. However, if we are to choose between the vast array of currency pairs available and have not developed a trading plan just yet, there are still some small but very important points we should take into account. Minor and simplistic as they may seem, in the long run they can seriously tip the scales in our favor.

First, a trader should never trade a totally unknown pair. Never go through the list and just pick one randomly, thinking that it “sounds” better than the others. Many people have a certain attraction for exotic things, and a taste of the unknown that may push them to look for NEW things, including when trading. It’s a basic psychological mechanism, and there is nothing wrong about it in general.

Unfortunately, when it comes to trading, jumping into the unknown involves a serious risk. Moreover, we are talking about an unknown risk… Just resist to this impulse. Go for the pair you know best, the one you have tested the most,the one that seems to you the most predictable. The market is challenging enough as it is, there is no need to add unnecessary difficulties to the process of trading. Make your life easier and pick a currency pair that you are comfortable with.

Secondly, a trader must be aware that each currency pair has certain characteristics of its own, that only become obvious to experienced traders. One may not use fundamental analysis for trading, however currencies do respond to fundamentals in different ways. Some pairs are volatile at some specific moments/time frames, some are more volatile than others, some respond to a certain kind of market data more than others…

There are a multitude of small aspects that can add to a trader’s set of edges, which we cover in detail in our courses. Similarly, even though a trader may not use technical analysis at all, he should know that there are pairs which respect the technicals more than others (S/R levels, fibs, trends, etc.). We are talking of course about subtle differences, but which are nevertheless visible to a trained eye.

Also, there are personal aspects related to one’s personal trading that should largely influence this decision. The geographical location of a trader, his availability to trade, his working hours, his appetite for risk, financial objectives, etc. - these are all subjective factors very important when choosing which pairs to trade. We are talking about a personal decision, and one that will influence our entire process of trading.

An educated trader will know what’s best for him once he understands the mechanisms that lay behind this simple decision. However, as the market becomes ever more competitive, it becomes essential to verify our educated decisions with the experience of a professional. A mentor is best in this respect, as he can take the time to know the trader well, know his strengths and weaknesses and give the best, personalized solution to each of these questions.

A mentor cannot guarantee a trader’s success in the market, but he can certainly guarantee that once a mentored trader enters the market, he will trade to the best of his abilities. Then, in time, he can refine these abilities through real market experience and turn our trader’s success from a mere possibility into a high probability.

Last, but not least, a basic, simple indication: trade as few currency pairs as possible. I mean it: the fewer, the better. Best - trade only one pair, until you know it by heart. It may take months, years, but it will be worth it. Currency pairs are moved by people - traders like ourselves - and knowing the pair’s tendencies and secrets is to know these people on some level. Try doing that, as it will help you develop a capacity to read between the chart lines and understand better your trading environment.