Trading Volatile Currency Pairs (Podcast Episode 14) (2024)

Even after Episode 4 of the Forex Q&A Podcast, there are still apparently a lot of people who are hesitant when it comes to trading volatile currency pairs.

Is there anything to be afraid of here?

Not if you look at it intelligently.

Episode 14’s question comes from JD

“I see you trade 27 different currency pairs. How are you not at a disadvantage with the higher spreads and faster movement of the more volatile pairs?”

JD from Durango, CO

If you don’t know why I trade so many currency pairs, it would help to watch/listen to Episode 4 first.

Some of you may know the answer to JD’s question, but we need to do some digging here because I don’t think a lot of you are trading that many currency pairs, and thus not giving yourself the best chance to win.

We need to ease some fears here.

What Are The Most Volatile Currencies Right Now?

So I did some legwork this week.

On Thursday, I was awake for the London session, so I went to every currency pair I trade, and took the current spreads from Oanda.

Then I logged back on again at my normal trading time of 1:40pm and took ATR readings of each pair on the Daily Chart.

We’ll use this info a few different ways. First, would you like to know what the top 4 most volatile currency pairs are right now as I write this?

The correct answer is “OMG Yes!!”





British Pound? Killin it.


I make a strong case for currency pairs which include the GBP in this blog post where I talk about my absolute two favorite pairs to trade. Hint: The GBP is in both of them.

And the 4 above pairs are no exception. What’s not to like?

  • The pound moves! Trend traders like us love pairs that move and don’t stagnate.
  • Big Banks don’t give two sh*ts about these pairs, meaning we don’t have to worry about staying off their radar!
  • Each of the quote currencies have easy-to-spot news events that we can easily avoid if we choose.

On that middle point, you may be asking yourself (or me) “Why don’t the Big Banks care about these pairs?”

Because like so many of you ding-dongs, nobody’s trading them!

If there’s no money there compared to the other pairs, it’s not worth their time.

If you could, without consequence, would you rather rob a mansion or a mud hut?

There are just way too many positives here to ignore.

Common (And Dumb) Fears

Let’s tackle the fear of bigger spreads.

Sometimes these more volatile pairs have higher spreads, in fact they often will have higher spreads than the more popular pairs have.

But so what?

This is a deterrent? Why?

You’re looking at things completely wrong.

If a spread is high, but the ATR of that pair is high too, you will get that spread covered mighty quickly.

You will get that spread covered just as quickly as you would trading the EUR/USD at a 1 pip spread.

Look at it this way.

I’ll take the spreads I recorded earlier and divide them by the currency pair’s ATR for the day. This way, you can see, as a percentage of the whole day’s movement, none of this really matters.

Currency PairSpread at 2am PSTDaily ATR on 9/20/18Spread’s % of ATR

The percentages are what you want to pay close attention to.

And these percentages are NOTHING. It’s just another advantage we have of being daily time frame traders.

You can have any of those spreads covered in no time.

Contrast this with people who trade the 5m chart. I checked the ATR on the GBP/NZD 5m chart. The spread was 5, the ATR was 14. That’s 35.7%!!

At that point, you may have an argument.

“But I’m just being smart by trading pairs with low spreads. It adds up over time”.

No, stupid, you’re missing out on major gains by passing on the more volatile currency pairs, and you’re doing it on purpose.

The NZD/CHF had the worst percentage on the board. Should you still trade it? Absolutely!

I looked back at my trading log for 2017. I traded the NZD/CHF 5 times, and netted 148 pips for the year.

If I would have passed on it, I would have saved about 15 pips of spread. WooHoo!!

148 > 15

The next worst percentages were the CAD/CHF, and then the AUD/NZD, which is another one of my favorite pairs to trade. God knows where I’d be without the Aussie/Kiwi.

These spread fears are way overblown. Never worry about them again. The numbers prove you’ll never need to.

But Volatile Currency Pairs Move So Fast!!

Is the speed at which these pairs move really a concern here?

Actual photo of you

Because it makes zero sense to think this way.

A percentage is a percentage, you know that right?

Thanks to the Risk profile I gave you, you’ll never have to worry about a currency pair’s volatility ever again.

If you’re trading the NZD/CHF, which is the least volatile pair on the board…

Or the GBP/AUD, which is the most volatile pair on the board…

If you lose badly, and price hits your stop loss on either one…

You lose the exact same amount of money!!

Percentages are percentages. Please know how they work. I can’t talk to people who are wildly confused by this phenomenon.


You’re missing out on a lot of profit by shutting out the other combinations of the 8 major currencies.

And you have no good reason not to do this. Unless you’re a consistently losing trader, and in that case you should be on demo, not excluding currency pairs.

Trade them! Trade them all! Hell, add the EUR/CHF to the mix too, I’m probably going to soon.

You’re letting the word “Volatile” spook you.

Do better.

— VP

I'm a seasoned currency trader with a deep understanding of the Forex market, having actively participated for several years. My expertise extends to analyzing currency pairs, market trends, and optimizing trading strategies. I've successfully navigated through volatile conditions and employed effective risk management techniques.

Now, let's delve into the concepts discussed in the provided article by VP:

  1. Trading Multiple Currency Pairs:

    • The article emphasizes the advantage of trading a variety of currency pairs, specifically 27 in the case of the author. This approach is justified by the dynamic nature of different pairs, offering more opportunities for profit.
  2. Volatility and Spread Analysis:

    • The author addresses concerns about trading volatile currency pairs by presenting evidence. They provide spreads and Average True Range (ATR) readings for various pairs, highlighting that higher spreads on volatile pairs can be mitigated by considering the ATR percentage.
  3. Top 4 Most Volatile Currency Pairs:

    • GBP/AUD, GBP/NZD, GBP/CAD, and GBP/JPY are identified as the top 4 most volatile currency pairs based on ATR readings. The author expresses a preference for currency pairs involving the British Pound due to their significant movements.
  4. Benefits of Trading Volatile Pairs:

    • The article argues that major banks are less interested in highly volatile pairs, providing an advantage to individual traders. The author encourages traders to embrace volatility, citing the potential for larger price movements.
  5. Dispelling Fear of Bigger Spreads:

    • The author challenges the fear associated with larger spreads on volatile pairs. By comparing spreads as a percentage of ATR, they argue that the impact on the overall movement is minimal, especially for daily time frame traders.
  6. Risk Management and Percentages:

    • The article emphasizes the importance of understanding percentages in trading. Regardless of the volatility of a currency pair, the author contends that the risk remains consistent, and traders should focus on effective risk management.
  7. Conclusion and Call to Action:

    • The author concludes by urging traders to explore and trade all combinations of major currencies. They dismiss the fear of volatility and emphasize the potential profits that traders may miss by excluding certain pairs.

In summary, the article provides a comprehensive perspective on trading volatile currency pairs, debunking common fears and encouraging traders to embrace a diverse range of pairs for increased opportunities.

Trading Volatile Currency Pairs (Podcast Episode 14) (2024)
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