Direct from the desk of Dane Williams.
It might sound strange to give forex currency pairs a human trait such as a personality, but there’s no better way to describe the nuances from pair to pair.
Thinking about their personalities is an intriguing proposition and one that all forex traders developing or refining their trading system need to consider.
On the blog today, I've gone over the unique characteristics within different categories of currency pairs and offered a daily average range for each.
Let’s dive right in.
The USD majors
Let's kick off with the heavyweights - the majors, characterised by the fact they contain the USD.
These currency pairs, including EUR/USD, GBP/USD and USD/JPY are renowned for their liquidity, making them remarkably predictable.
You can definitely find comfort in the stability of these pairs, as their movements tend to follow established patterns.
All of which allows more strategic decision making.
Average daily range: Approximately 80-120 pips
The Aussie, Kiwi and Loonie
Moving on to the commodity currencies – the Aussie (AUD), Kiwi (NZD) and Loonie (CAD).
These currencies are closely tied to the demand for natural resources, particularly from emerging economic powerhouses like our friends, China.
The ebb and flow of commodity prices significantly impact these pairs, creating unique dynamics that you need to navigate if they’re a part of your strategy.
If you haven’t traded any of these pairs, I’d encourage you to test them as part of your strategy before implementing them.
Their personalities are… unique to put a word to it.
Understanding the intricacies of resource driven markets adds an extra layer of insight when dealing with AUD/USD or even a cross such as CAD/JPY.
Average daily range: Varies, but around 70-100 pips
The JPY crosses
Speaking of crosses, EUR/JPY and GBP/JPY obviously have direct connections with the Japanese Yen.
GBP/JPY, often nicknamed the beast, lives up to its reputation by showcasing heightened volatility.
If you’re drawn to the thrill of unpredictable, massive directional movements and swings, you will enjoy the personality of the JPY crosses.
However, it's essential to tread carefully, as its moniker implies, without proper risk management principles in place, the beast can devour your account in an instant.
With the Euro strained to breaking point, EUR/JPY also presents its own set of challenges, adding a layer of complexity.
Average daily range: GBP/JPY – 120-200 pips, EUR/JPY – 90-150 pips
The exotics
For those of you who thrive on heightened volatility, the exotics take it up a notch again.
These currency pairs, featuring currencies of emerging economies, bring a dose of unpredictability to the table.
Exotics, such as USD/TRY or EUR/ZAR, showcase completely unpredictable movements.
Well, they’re predictable if you’re a part of the government behind manipulating these currencies, but that’s a whole other story!
If you're a crazy mofo and are happy with the heightened risk you take on by trading them, the exotics are for you.
Average daily range: Highly variable, ranging from 150-300 pips
Final thoughts on the personalities of forex currency pairs
The bottom line is that the diverse personalities of forex currency pairs cater to a wide range of trading preferences.
No matter who you are or how you want to trade, there’s a currency pair that will fit.
You’ve just gotta put the testing hours in to find it.
While many of you are drawn to the adrenaline pumping JPY crosses or exotics, I personally gravitate towards the USD majors on my master candle trading strategy.
Their liquidity provides a stable environment, fostering predictability that aligns with my own no fuss personality.
Best of probabilities to you.