Hi Thorian,
Thanks for your message.
Exotics can be suitable for day trading but there are some key considerations and challenges to weigh up:
- Exotics tend to exhibit higher volatility than majors, providing opportunities to profit from significant price movements over a short period.
- Exotics tend to have lower liquidity than majors which may result in slippage (the difference between the requested and actual price). This can seriously affect day trading results.
- Exotics tend to have wider spreads and higher trading costs than majors. Again, this can really impact the profitability of short-term trading strategies.
- For these reasons, day traders often target more liquid, major currency pairs (EUR/USD, USD/JPY etc).
- Like day trading any currency pair, risk management is essential if you deal in exotics.
Among the most popular and traded exotic currency pairs are:
- USD/ZAR (US Dollar/South African Rand)
- USD/SGD (US Dollar/Singapore Dollar)
- USD/INR (US Dollar/Indian Rupee)
- USD/HKD (US Dollar/Hong Kong Dollar)
- EUR/TRY (Euro/Turkish Lira)
James Barra