Many people trade cross currencies that do not involve the U.S. Dollar at all. Some of those crosses include things like Euro and Yen crosses, but there are also more obscure options available for those who choose to trade them. Obscure crosses can almost be thought of as if they aren’t part of the “in” crowd.
Some examples of obscure crosses include CAD/CHF, AUD/NZD, and AUD/CAD. Trading in these types of crosses is certainly riskier than trying to trade in some others. It is important to understand what you are getting into before trading in any currency type, and that certainly includes these cross-currency options.
A big part of the problem with the more obscure currency crosses is the fact that they are less liquid, as there are fewer traders putting their money to work in them. Thus, they tend to be more volatile than the average currency pair, and they may also experience more whipsaws and other types of movements that are less than desirable. Therefore, all traders are cautioned to make sure they are fully prepared for the wild ride that they may have to endure when they attempt to trade these pairs.
Do you want to see some whipsaw effects in currency crosses? Check out this scary effect in a chart of CADCHF:
It can be very challenging to catch a good trade in these pairs. The setups and consistency simply aren’t there like they are with the higher volume pairs available for trading in the market.
Disclaimer: All information provided here is intended solely for study purposes related to trading financial markets and does not serve in any way as a specific investment recommendation, business recommendation, investment opportunity, analysis, or similar general recommendation regarding the trading of investment instruments. The content, in its entirety or parts, is the sole opinion of SurgeTrader and is intended for educational purposes only. The historical results and/or track record does not imply that the same progress is replicable and does not guarantee profits or future profitable trading records or any promises whatsoever. Trading in financial markets is a high-risk activity and it is advised not to risk more than one can afford to lose.