Forex markets are extremely liquid and very reactive to world news, politics and events, meaning they can be extremely volatile at times.
Many beginner traders try to avoid trading the volatile currencies whilst learning the ropes, whereas many experienced forex traders actually develop strategies purely for the most volatile forex pairs.
Volatility, within forex, is typically measured by the amount of pips the currency pairs move in a given day, along with the standard deviation. By looking at these metrics, we are able to work out the most volatile forex pairs so you can either reap the rewards, or stay clear!
At some point, you’ll have to start trading the volatile pairs!
The most volatile forex pairs in 2022 are AUDJPY, AUDUSD and EURAUD. This is followed closely by NZDJPY, GBPAUD and GBPNZD. These currencies provide a huge amount of opportunity, with a huge amount of risk.
Which are the Most Volatile Forex Currency Pairs?
The most volatile Forex currency pairs
are always going to be the currency pairs that see the highest frequency and biggest strength of price change over a given block of time.
Low volatility curency pairs aren’t going to move that much. They are generally pretty stable. They are generally pretty predictable. What you see is what you get (for the most part).
The most volatile Forex currency pairs, on the other hand, are going to bounce all over the place.
These are the kinds of pairs that see giant ups and downs, spikes and valleys, and breakouts left and right.
In 2022, the most volatile currency pairs are shaking out to be:
- AUD/JPY (with average volatility of 1.12%)
- AUD/USD (1.07%)
- EUR/AUD (1.07%)
- NZD/JPY (1.05%)
- GBP/AUD (1.05%)
- GBP/NZD (1.05%)
By the end of the year that this list might look a little different, but for the most part the “exotic currency pairs” – like NZD/JPY, for example – are going to see the highest level of volatility as a general rule of thumb. All of this volatility can be seen on Trading view charts.
The bottom line is this:
If one currency in a pair is most susceptible to wild market swings or currency fluctuations you’re going to be seeing a lot of volatility.
If both of those currency pairs are susceptible to these kinds of fluctuations you get even more volatility!
The Pros and Cons of Trading the Most Volatile Forex Pairs
One of the reasons that forex investors like high volatility currency pairs is because they have a tremendous opportunity to become “lottery tickets” – the kinds of pairs that can payout windfall profits on initial trades that didn’t cost investors all that much.
A lot of investors are looking to beat the market in the world of forex and aren’t shy about pumping money into high volatility pairs.
These high risk pairs see the bid raise with this influx of money, increasing volatility even more so.
If you’re able to ride the tiger (so to speak) at the right time with this kind of volatility you can turn a small amount of money with a little bit of leverage into life changing wealth pretty quickly.
On the flip side of things, though, it’s not at all uncommon to see stop losses – even trailing stop losses – get triggered a lot more frequently in high volatility ups and downs.
The problem here is that a stop loss could close out a position for you at a loss right before the market rebounds to the highest highs it’s ever hit – right before cratering back down to your stop loss all over again.
High volatility trading is also very much a short-term kind of move.
A lot of longer-term investors (especially those that are more comfortable with the “buy and hold” principles of the stock market) generally aren’t going to be able to handle the wild swings that high volatility currency pairs inevitably bring to the table.
Think of these moves as “get in and get out” kind of opportunities and reframe your strategies accordingly.
How to Find the Most Volatile Currency Pairs
Finding the most volatile pairs in the Forex market is a big piece of the puzzle, but they aren’t going to be all that difficult to come across.
For one thing, you’ll want to look for “exotic pairs” like the ones that we highlighted a moment ago – these are the currency pairs that combined one major currency with another currency from an emerging market.
You’ll also want to be on the lookout for the current movement trends for currency pairs as well.
Price movement in the world of forex is almost always described in “pips”.
A currency pair that moves 200 pips during a given block of time is going to be a whole lot more volatile than a currency pair moving 25 pips, 50 pips, or even hundred pips over that same stretch of time.
Volatility is generally going to be influenced by economic information, political uncertainty or events, the liquidity of one currency in that pair (or both), as well as the overall supply and demand for that pair.
If you’re interested in this side of forex trading, I’d recommend using the news sites like Forex Live to stay notified of all trending economic updates.
At the end of the day, market research and technical analysis will help you spot currency pairs that are seeing a lot more volatility than others.
You’re going to have to read some charts and you’re going to have to pay attention to movement on a day-to-day basis. This is really the only concrete way to determine which currency pair is volatile in the moment.
There are various different trading strategies you can use to track the price movements on a daily basis, like the EMA trading strategy, for instance.
Have a look at pips per day movement numbers and see what kind of volume these currency pairs are trading at.
Are you seeing a lot of movement?
Are prices swinging all over the place?
Have things slow down and flatlined a little bit?
Answer these questions as soon as you are getting ready to pull the trigger on a trade and you’ll know whether or not you are getting into a high volatility pair or one that’s a little less risky – as well as has a little less potential to payout big time.
Frequently Asked Questions
Which Forex Pair Is The Most Volatile?
The most volatile forex pairs in 2022 are AUDJPY, AUDUSD and EURAUD. These forex pairs have been providing a huge amount of opportunity, whilst also providing a high risk level to traders.
Why Are Forex Pairs Volatile?
Forex pairs become volatile due to a number of factors including politics, world events, central bank rates and overall trading volume.
Which Forex Pair Consolidates The Most?
EURUSD and EURCHF consolidate the most out of all of the forex pairs. These currencies are typically very safe and make great forex pairs for beginners to trade to learn the ropes.
Which Forex Pair Moves The Most?
It’s hard to say which forex pairs moves the most, as the question is not specific. In terms of actual pips, XAUUSD and GBPNZD are usually moving the most. However, in terms of volatility, AUDJPY will be the most volatile forex pair.
In Conclusion – What Are The Most Volatile Forex Currency Pairs?
In summary, the most volatile forex pairs are those that see the biggest price swings and that are influenced by a variety of factors, including global economic conditions, political uncertainty, and overall supply and demand.
You can find these pairs by monitoring pip movements as well as overall volume, and you can make money off of them by trading short-term with an understanding of the risks involved.
Remember, high volatility trading isn’t for everyone – it can be incredibly risky and it often goes against the buy and hold mentality of many longer-term investors.
But if you are prepared to handle the risk and you know what you are doing, then these volatile currency pairs can definitely help you make some serious profits.
