Examples of popular exotic currency pairs are EUR/TRY, GBP/BRL, and SGD/EUR among others. Exotic currencies represent the currencies of both developing countries as well as a specific few developed countries. https://day-trading.info/top-18-best-day-trading-stocks-in-2021/ This group of exotic currency pairs was informed by economic statistics from global organizations like the IMF. Exotic currency pairs are usually highly volatile and are lacking liquidity.

Due to illiquidity, exotic currency pairs tend to be more volatile than major pairs. The volatility can lead to unpredictable price swings, especially if there is significant unexpected political or central bank news, which may even be unrelated to the currency itself. For example, the election of Donald Trump in 2016 triggered a plunge in the Mexican Peso by more than 12% against the US Dollar. Trading currency pairs is conducted in the foreign exchange market, also known as the forex market. This market allows for the buying, selling, exchanging, and speculation of currencies.

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The total number of currency pairs that exist changes as currencies come and go. All currency pairs are categorized according to the volume that is traded on a daily basis for a pair. You can also add stop losses to keep yourself from losing too much money on your trades. If you’re trading a commodity currency, you may be able to hedge your forex trades by making counter-investments in opposite currencies through particularly turbulent times. The Thailand baht is an exotic currency, and it is one of a small number of exotic currencies with minimal response to downturns in China’s economy. This has made the pair appealing to many traders looking for a safe haven when trade negotiations get tricky between the U.S. and China.

Once I have raised a request, I rest assured that’s it’s in the right hands and gets done always with extraordinary service. In addition to the commodity currencies, the Minors also include the Scandinavian Currencies. However, they are also more volatile, which can mean bigger profits if you know how to play the system. Even though leverage in forex can bring you bigger gains, it can also bring you bigger losses. Make sure you understand how to use leverage before you dive into big leverage ratios that could tank your entire portfolio.

Characteristics of exotic pairs

Insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX business. I had a great experience with BookMyForex during my travel to Sweden. These guys have an excellent Service, best market rates and a high level of professionalism.

We offer deals in a range of exotic currency pairs through our network of FCA-regulated partners. Due to this illiquidity, market manipulation can also occur in thinly traded exotic currency pairs, as witnessed in the case of manipulation in the ZAR/USD pair in 2017. The term ‘exotic currency’ is a catch-all term for any kind of currency or currency pair, which is unusual to deal in because it is, well, “exotic”. The term is used interchangeably with emerging market currencies and, more generally speaking, smaller currency pairs with low liquidity. The answer, of course, depends on what kind of trading you’re looking to do.

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Both trade exotic currencies are tied to the prices of gold and steel, the leading producers of oil and gold. A moneycorp account allows you to exchange up to 33 different currencies online, providing a wide range of exotic currency pairs to cater for your online money transfer needs. In addition, our team of currency specialists can offer you access to over 120 different currencies over the phone, helping you through the process of https://currency-trading.org/education/what-determines-the-strength-of-a-currency/ making your currency transfer. An exotic currency will usually have better liquidity if it is traded against the currency from a major trading partner. The Turkish Lira is therefore usually traded against the Euro, the HKD against the USD or Chinese Renminbi and Mexican Peso against the US Dollar. You would struggle to find a broker offering a Malawian Kwacha/ Swiss Franc pair, but even if you did the spreads would be very wide.

Exotic currencies are more sensitive to changes in global risk appetite and interest rates. Like all currency pairs, trading exotic pairs should be backed by fundamental and technical analysis. Keep in mind that high price swings are always expected for exotic pairs.

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For more experienced traders, exotic pairs can be riskier but these risks could potentially pay off, as long as you know what you’re doing. There are both pros and cons to trading exotic pairs in forex, and many experienced traders can tell you that they have seen the highs and lows in this section of the market. There are many benefits to forex trading in general, and the ability to trade a variety of exotic currencies from around the world is one of them. For the most part, traders need to have a longer-term view when trading exotic currencies than they would with major currencies. The less liquid a currency is, the longer the time horizon should be.

To execute the trade, the broker will first need to convert the account currency to the exotic pair. Exotic currencies, both from emerging and frontier market countries, are not widely traded and tend to have relatively low liquidity compared to more prominent international currencies. Currency pairs are quoted based https://topforexnews.org/brokers/dukascopy-bank-sa-customer-reviews-2021/ on their bid (buy) and ask prices (sell). The bid price is the price that the forex broker will buy the base currency from you in exchange for the quote or counter currency. The ask—also called the offer—is the price that the broker will sell you the base currency in exchange for the quote or counter currency.