Ever Trading Forex with Exotic Pair? Here’s the list
You already know the various types of pairs are major, minor and exotic to be part of a tradable pair. This time will be discussed exotic pair of terms that are given for currencies less liquid because it is rarely transacted, less popular in consistent market activity, and trades with markup costs high enough on certain brokers.
Because trading patterns are constantly changing based on economic and geopolitical developments, the basis of grouping of exotic forex pairs may change over time. The following is a list of indications of exotic pairs:
All the pairs show characteristics with thin trading, large spreads and limited trading interest by market participants.
Exotic pairs do not always mean weak or undervalued currencies, but they only show the limitations and “unpopularity” of behavior in terms of trading activity. For example, the Kuwaiti dinar (KWD) and the Saudi Riyal riyal (AED) are two high-value currencies, yet they are still considered exotic due to limited trade.
Exotic trading pair is not for everyone. Short-term profit opportunities are difficult to achieve by the high cost of mark-ups and the extent of spreads, while long-term investments require patience, knowledge of economic and geopolitical developments and their impact. An individual should consider exotic forex investment and trading with sufficient experience and potential risks.
As a retail forex trader will usually avoid this exotic trading pair because retail traders want short and fast targets, requiring a liquid pair.