Is it better to avoid Exotic currency pairs? Why?

[Esha.J]

I do not think that we should avoid Exotic pairs. If we learn how to work with them then we can surely going to earn good.

 

[LloydPhill]

I wouldn't necessarily say avoid them, but what will help is considering the risks associated with them. Like the following;
- Low liquididty makes it harder to trade forex exotics. Most transactions occur at banks at pre-determined fixed rates for remittance or similar activities.
- It gets extremely difficult to track and forecast the developments on macroeconomic factors for distant countries.

 

[Esha.J]

Watching Exotic pairs and study them can also help us to improve our trading. In future, you can trade them.

 

[Handle123]

What some of you might not know, if you think Arab Emirate Dirham is going to go up against the U.S.Dollar, you can have your broker exchange dollars for Dirham and leave it is another account, don't touch it, you will pay for the exchange, when it gone in direction you want and find some other currency bottoming against the dollar, exchange Dirham into new currency.

You can exchange Dollar into Euro's and then use that account to trade Eurex products and not pay exchange fees since it already in the Euro. Of course you not able to use leverage as you do in Forex or futures. But I do that so I trade exchanges of those currencies. I won't trade Exotics, as most of you all know, I hedge for longer term positions, so all my longer term currency trades are in forex as I might stay few years till dollar bottoms out, but I stay with currencies that have options on futures, but regarding forex.

But I don't see the point of losing so much to trade exotic pairs in forex, it be like have a losing trade twice.

 

[Izanlp2]

I only trade with eurusd and I think that the most stable pair, my daily profit +20/+30 pips

 

[wwatson1]

I only trade with eurusd and I think that the most stable pair, my daily profit +20/+30 pips

View attachment 196647

Looks like you bought the High! Your buy trade is at the high of that breakout candle right before it faked everyone out and tanked

 

[Izanlp2]

Very good trade, close 1.1560 and now every day closed more. Today eurusd + 50 pips with buy, later gbp + 28 and now eurusd sell + 20 and gbpusd + 15 pips, total 113 pips.

 

[carlosnorb]

i don't like exotic pairs. they have strange spreads and can be unpredictable

 

[pipeguy]

i don't like exotic pairs. they have strange spreads and can be unpredictable

Yes it's quite hard to trade exotic instruments, because idiosyncratic risks increase when you trade these instruments. I lost a lot of money trading on USDRUB because of manipulations and confusing market signals

 

[peter_pan]

Lately, I have been watching the market of exotic currencies which are not so commonly traded. Especially Turkish Lira, the Mexican Peso and the Brazilian Real. One of my friend said, you must avoid those pairs. That's what he learned from the experts. He could not explain it to me. Can anyone here explain that? Why exactly most people avoid these currencies?

It is better to avoid exotic currency pairs because the uncertainty factor is high in such pairs. Since they are from the emerging or developing economies one can not be certain about the returns from such pairs. These currency pairs have a larger spread say as high as 40/50 pips sometimes and are less liquid. The transaction costs are also high meaning the cost of executing the trade is high.