Being consistent, patient, and knowledgeable are all necessary for success in the Forex market. Most critical is making a calculated decision about which currency pairs to trade.
This is because traders’ strategies and risk tolerance often must be adjusted when dealing with different currency pairings.
Consider the volatility of the pairs you’re considering while selecting your exchange pair. The inherent danger of each currency combination varies. There’s a good reason why some things are riskier than others.
Understanding the disparity between the most and least volatile currency pairings is also crucial. For instance, currency pairs that experience greater volatility over time tend to see greater gains or losses in terms of pips.
The most volatile foreign exchange currencies have the most potential for profit or loss. So, select them with extreme caution.
List of most Volatile Forex Currency Pairs to trade in 2023
1. AUD/JPY
Due to its sensitivity to market fluctuations, the Australian dollar against the Japanese yen ranks as this list’s most volatile currency pair.
The Australian dollar is highly sought after, yet its value frequently fluctuates due to its status as a product currency. Thus, the value of the Australian dollar is tied to the commodities, foods, and metals that the country exports.
However, the Japanese yen enjoys a reputation as a haven currency because investors often purchase it in times of uncertainty.
Since this is not the case for the AUD, the AUD/JPY currency pair is susceptible to large price swings due to changes in the global economy.
2. USD/MXN
This is another pair of currencies that experiences substantial market movement. The value of one US dollar relative to one Mexican peso is displayed.
Despite the pair’s fluidity, the political friction between the two countries increases volatility. The US dollar to Mexican peso exchange rate is more unstable due to high tariffs on Mexican imports.
3. USD/BRL
USD/BRL symbolises the exchange rate between the US dollar and the Brazilian real. Because of the frequent price fluctuations, this pair is popular among day traders.
Because the administration is unstable and there is widespread criminality, it frequently relocates. It’s expected that this combination will remain volatile for the foreseeable future.
4. GBP/AUD
Trading between British pounds and Australian dollars is a high-risk cross-currency pair. As the Australian dollar is a commodities currency and trade tensions between the US and China has caused market turmoil, this currency pair is very volatile.
Bottom line
It may be challenging for a novice forex investor to trade volatile forex pairs due to the high risk involved. However, with certain strategies and advice, you may determine which volatile combinations will serve you best.
First, you must acquire extensive knowledge about volatility, including its causes, indicators, and calculation methods. Scalping, day trading, swing trading, and price action are some strategies that can be employed in unpredictable financial markets. In addition, slippages might occur with volatile forex pairings, so it’s important to grasp this concept to contain your losses.
