Forex market stands for one of the most important financial markets globally, with a daily volume of over $ 5,000 billion. This creates unparalleled liquidity, or the ability to buy or sell quickly at the current market price. When other markets experience spikes in volatility, liquidity often dries up, making it more difficult to trade at the advertised market price.
Opportunities from currency volatility
Forex offers several advantages over other markets in volatile trading environments. Experienced traders have learned that global financial markets oscillate between periods of low volatility and a period of higher volatility. While these different volatility regimes can be specific to a certain market (stocks, bonds, commodities, currencies, etc.), it is common to see the magnitude of market movements impacting all financial markets at once.
In other words, when the stock market is more volatile, we often see greater fluctuations in currency prices in the Forex as well as the commodities market, given the interconnected nature of the global financial system.
The summer of 2020 was a period of high volatility. And the trend continues in the same vein. The most notable movements were on Forex, with the most volatile pairs being the ones incorporating pounds sterling due to Brexit and all its consequences for the UK and global economies.
The immediate aftershock of Brexit has faded somewhat, but other factors are still affecting markets and Forex pair volatility.
So what have been the most profitable/volatile currency pairs recently?
Some of the most volatile currency pairs at the moment among the major pairs are GBP/USD AUD/USD EUR/USD USD/CAD.
The volatility is the highest for the following pairs when it comes to cross pairs and exotic pairs. Cross pairs: CAD/CHF GBP/NZD AUD/CAD. Exotic pairs: USD/SEK, USD/SGD, USD/BRL
The Swiss franc should continue to appreciate as it serves as a safe haven. Commodity-linked currencies, for their part, should continue to rise due to a policy of higher interest rates. Regarding emerging currencies, bets are riskier for individuals because they are less liquid.
To profit from the volatility you have to deal with a good Forex broker. Also, currency markets require both macroeconomic and geopolitical reading. So go for the broker that enables you free education, webinars, and ebooks, or training on a demo before you entrust them your money.
Make profits with the most volatile currency pairs.
The currency market has been particularly volatile in recent months. This volatility carries risks but also generates many opportunities. Opportunities that some now make available to the general public.
Until recently, this was a market rather reserved for financial professionals. New players, such as online brokerage platforms, have indeed flourished in recent years.
Platforms allowing access to the Forex market are multiplying and attracting individual traders. The instruments used are highly speculative and are based on the leverage of up to 200. With a stake of 10,000 euros, you can bet up to 2 million euros!
In higher volatility environments, as we’ve seen recently, Forex offers many advantages over other markets, but traders need to apply good risk management strategies to take advantage of these opportunities.