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Exotic Currency Pairs Trading – What you need to know

Exotic Currency Pairs Trading

Exotic Currency Pairs trading is becoming popular among traders day by day. Most of the traders are now believing that exotic currency pairs trading is much more profitable as it goes on a stable line. We don’t need to face much difficulties to find out the trend and taking trading decision is far more easy.

This question is particularly important for anyone who insists on trading only major currency pairs. First, and perhaps most importantly, did you know that the currency is called Dong Vietnam? For simplicity and if not yet trust me, I present a graph of Dong:

Exotic Currency Pairs Trading

What is exotic currency?

For those of you who are not sure exactly what they mean exotic currencies, these often are those which never hear. Nobody talks about them, as they tend to move more, may be more susceptible to change and most likely scare many traders. However, I have a secret for you … exotic currencies should not scare you. On the contrary, exotic currencies tend to offer some of the best opportunities in the foreign exchange (FX).

You do not believe me? Well, here are three reasons why you should consider adding a couple of exotic currencies to your account:

1) They are “technically compliant”. What does this mean? This means that if there is a break of support or resistance , this will be a real movement and can be used the next level of support or resistance for a target with very high probability. This usually is not the case in the case of elderly couple, who are normally “caught” by a lot of market forces.

2) They move. As I said earlier, the exotic currencies tend to move a lot, which scares people. However, he never made any profits with currency pair stagnated. For example, if the Turkish lira gives a bearish trade really down and not move 10 pips and then stop and reverse.

Another important detail, a pair of exotic currencies can move 2,000 pips and then stop, I rock solid. Why? Because only a small number of banks trading with these pairs, so that once a movement starts, it continues and rumbles long term but once the movement stopped, no other trader out there to reverse . Returning to our example of the Vietnamese dong, it is for that reason you get so wild trends as those seen in the chart above.

Exotic currency pairs SHOULD NOT scare … These couples tend to offer some of the best opportunities in the Forex market …

3) Finally, trade exotic currency is fun. Apart from the exotic word, sure reminds a beach in Thailand or in a cove picturesque palm trees, exotic currencies help cut the monotony of a boring trade in another way. While trading should not be based on emotion, why not enjoy what you are doing, especially if this is your job, career, or in some cases their passion in life?

An entirely different matter, and that maybe fits a future topic of discussion, is what kind of work strategies used for exotic pairs. Currently, I have one that I use a couple of times a week and I will share with you:

Exotic Currency Pairs Trading Strategy

Here’s a simple system for trading a pair of exotic currencies – in this case the US dollar against the Mexican peso (USD / MXN). As a side note, do you know why I love this currency pair (I call it the taco, by the way)? Because if there is a break in the short term on the pair usually it is enough for a good race. Again, think MOVEMENTS. Here’s an example:

Exotic Currency Pairs Trading

In the morning, around 8:00 in the eastern United States, drawing trend lines on the chart. Also drawing basic support and resistance. To do this, I use the 15 minute chart.

Then I wait for a break. If breaks above resistance or below support, I trade in the direction of the break. When should I stop? Just keep the trade until it reaches the next level of support or resistance.

If the trajectory of the currency pair reverses (which is rare), I do not hold the trade loss. On the contrary, I go out with a loss if closes again broken the support or resistance. Simple and easy.

Further reading on Exotic Currency pairs : Investopedia

About the author

Md Chhali Uddin

Md Chhali Uddin is a Renowned Financial Analyst. He is also involved with Forexing24.com as a writer and financial Analyst. He is a brilliant Financial geek with vast experience in every sector of Currency Trading.

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