Exotic Pairs
Exotic pairs are a type of currency pair that consists of a major currency and a currency from an emerging or smaller market. These pairs are not as widely traded as the major currency pairs, and they often have higher spreads and more volatile markets. Exotic pairs are typically more difficult to trade than major currency pairs, as they are less liquid and more prone to large price movements.
History of Exotic Pairs
Exotic pairs have been around since the early days of currency trading. They were initially used by traders to hedge against currency fluctuations in emerging markets. As the global economy has become more interconnected, exotic pairs have become more popular with traders looking to diversify their portfolios. Today, exotic pairs are traded by both institutional and retail investors.
Comparison of Exotic Pairs
| Currency Pair | Spread | Volatility |
|---|---|---|
| EUR/USD | 0.5 pips | Low |
| USD/ZAR | 2.5 pips | High |
Summary
Exotic pairs are a type of currency pair that consists of a major currency and a currency from an emerging or smaller market. These pairs are not as widely traded as the major currency pairs, and they often have higher spreads and more volatile markets. Exotic pairs are typically more difficult to trade than major currency pairs, as they are less liquid and more prone to large price movements. For more information about exotic pairs, traders can visit websites such as Investopedia, FXCM, and Forex.com.
See Also
- Major Currency Pairs
- Cross Currency Pairs
- Currency Correlations
- Currency Hedging
- Currency Swaps
- Currency Futures
- Currency Options
- Currency Arbitrage
- Currency Carry Trade
- Currency Risk Management
