- Trade Minor and Exotic Pairs with SimpleFX
- Why you should trade Minor and Exotic Currencies?
- What are the risks of Minor and Exotic pairs?
Trade Minor and Exotic Pairs with SimpleFX
SimpleFX doesn’t just offer simple and easy trading environment, but they also have a number of financial markets and trading tools.
On SimpleFX Web Trader, you can trade Forex currency pairs, Cryptocurrency pairs, Stocks (Equities), Stock Indices, Commodities and also Precious Metals.
The list of available financial instruments on SimpleFX is long, and SimpleFX covers almost all financial instruments you could think of and other brokers offer.
SimpleFX’s web trader is also great for trading minor and exotic currency pairs.
SimpleFX offers Minor and Exotic currencies which no other brokers offer, such as the followings:
- ZAR (South African Rand)
- TRY (Turkish Lira)
- SGD (Singapore Dollar)
- SEK (Swedish Krona)
- RUB (Russian Ruble)
- PLN (Poland złoty)
- NOK (Norwegian Krone)
- MXN (Mexican Peso)
- KRW (South Korean won)
- ILS (Israeli New Shekel)
- HUF (Hungarian Forint)
- DKK (Danish Krone)
- CZK (Czech Koruna)
Majority of traders monitor only major currency pairs’ markets though, minor and exotic currency pairs are attracting more attentions due to each of their unique characteristics.
Log in to SimpleFX’s web trader, to start diversification of your investment portfolio.
Why you should trade Minor and Exotic Currencies?
What are the benefits of increasing the number of currency pairs in FX trading?
Did you know that multiple currency pairs often start moving all at once?
In other words, increasing the number of currency pairs is likely to increase opportunities.
We will thoroughly explain the merits of increasing the number of currency pairs, including risks.
There are many people who say, “I specialize in EURUSD”, “I see only USDJPY and GBPJPY”, and “I do not trade or even see unknown currency pairs”.
Remember that you can trade various currency pairs in FX, and maybe there are hidden revenue opportunities in it.
SimpleFX handlea a large number of currency pairs, and you can trade about 100 currency pairs.
Consider the benefits of increasing the number of currency pairs you trade.
1. More trading opportunities
If you are a technical person who trades on the basis of charts, doubling the number of monitored currency pairs will also double your profit opportunities.
When trading based on long charts such as daily charts and 4-hour charts, the smaller the number of currency pairs to be traded, the smaller the number of entries.
No matter how much back-testing is done with past data, if the number of entries (the number of trials) is small, it will be difficult to obtain the expected results.
The more competitive your method is, the greater the benefit of increasing the number of trading currency pairs.
2. Currency pairs often move all at once
Currency pairs are moving with interaction.
Often, when the EURUSD rises, a Cross-USD currency pair such as the USDJPY or USDAUD also starts to rise.
Or it may be “EUR are sold in any currency”.
When a trend occurs with a single currency, if you look at multiple currency pairs, you can judge the occurrence of the trend with a higher degree of accuracy, and you can also find a currency pair that is likely to have a large price movement.
It is good to trade only USD/JPY or EUR/USD, but there may be clearer and stronger trends in other currencies such as Australian dollar and the Swiss franc.
Keeping track of a wide range of currency pairs can improve the accuracy of your trades.
What are the risks of Minor and Exotic pairs?
Unlike major currencies such as the USD and EUR, you need to be careful about risks that you do not have to consider so much in the minor currencies.
There are risks such as sudden changes due to news, risk of jumping prices due to weak liquidity, and risk of sudden widening of spreads.
Find out what risks you have and how to deal with them.
1. Risk of loss due to sudden price movements
Do you remember the “Swiss Shock”?
Every FX veteran is aware of this.
In 2015, the Swiss central bank experienced a sudden change in policy, causing the Swiss franc to soar.
With the announcement of the Swiss central bank, the EUR/CHF instantly fell by over 2000 pips.
Even if it was over 2000 pips, the impact may not be easy to convey, but in terms of USDJPY, it is a shock that will crash from 120 yen to 96 yen in a few minutes.
It’s a happy event for those who traded for sell, but a nightmare for those who traded for buy.
In FX, there is a “Stop Out” system to prevent a loss more than the deposit money deposited, but the swift shock and the impact of the Swiss shock were too strong.
As a result, there were some people who suffered losses beyond the margin because the stop out was not in time.
In case of SimpleFX, you do not have to worry about loss beyond the total account balance, as SimpleFX support NBP (Negative Balance Protection).
This kind of shock is rare, but let’s keep it in mind as a risk unique to minor currencies.
2. Risk of incorrect analysis due to lack of information
Not a few people were hit hard by the Swiss shock, while others were wisely standing around and building selling positions.
The difference is information power.
Information about Swiss monetary policy is by no means abundant.
The smaller the currency pair, the greater the difference in analysis accuracy depending on whether you can research and analyze news in English and local languages.
When trading minor currencies, it is a good idea to check websites such as major local newspapers and Twitter, even to check the headline alone.
3. Risk of sudden change due to low liquidity
In the foreign exchange market, the US dollar is the main axis, followed by the Euro and Japanese yen.
Looking at the transaction data released by the Bank for International Settlements etc, the currency pairs traded in the foreign exchange market are largely biased toward these major currencies.
The trading ratio of currencies of emerging countries such as Turkish lira, South African rand and Mexican peso is very small.
Such a situation where there are few people to trade is referred to as “liquidity is low”.
What happens if the liquidity is low? The impact of large orders increases, and it becomes easy for prices to change suddenly just by entering a slightly larger order than usual.
Please also note that it is possible for a minor currency pair to have a trade that is less favorable than the rate specified for the stop loss (stop order).