Is it better to avoid Exotic currency pairs? Why?

Do you trade Exotic Currency Pairs?

  • Total voters
    44
You'd better avoid trading exotic pairs if don't have rich trading experience behind your back and if you don't know anything about the economy of the countries which these currencies represent.
The major obstacle, from my perspective, is low liquidity. What does it mean for traders? Well, you'll have lots of slippages and high occasional volatility. Surely, volatility is good for traders because it is actually the only way he/she can make money on trading forex. However, if the volatility takes place and the trader wasn't prepared for it, he is sure to lose lots of money, especially if he doesn't follow the principles of money and risk management. So, nobody prohibits you trading Brazilian reals or Turkish liras, but you need to be prepared to all the risks associated with such currencies.
 
Adler said:
I avoid trading with exotic currency pairs because the spreads are higher when trading with them, and compared to major pairs, the exotic is not popular among traders.
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Isn’t it a nice opportunity to earn huge profits? Exotic pairs are highly volatile and can give you high rewards that you won’t otherwise get through trading major pairs. I won’t suggest trading exotic pairs heavily but it isn’t good either to avoid them completely.
 
Ideally, it is a good idea to try out exotic pairs to see how it works out for your trading. If it is too volatile, you would either try it out or step back.
 
I prefer to avoid exotic pairs as they are highly volatile and less predictable. Trading is already risky and I don't want to make it more riskier.
 
Exotic pairs are better for medium-term trading they are more predictable if you have good grasp on idiosyncratic factors that affect them
 
kroxobor said:
Exotic pairs are better for medium-term trading they are more predictable if you have good grasp on idiosyncratic factors that affect them
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But we must not forget that working with such couples is to expose yourself to certain risks, especially if you have little experience.
 
koczeau said:
@kroxobor I really don't find it a worthy trade to be honest . Why would I trade on exotic pairs when the spreads are so high and the liquidity is comparatively low.
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Exactly!
Volatility is pretty high on exotic pairs which increases the risk of trading. Because of this huge uncertainty factor traders avoid these pairs.
 
If you are a beginner in forex, I suggest avoiding such pairs since it is risky to trade. They have lower liquidity and volume, and finding a suitable strategy is difficult.
 
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