Be Careful Trading Obscure Currency Crosses

While the euro and yen crosses are the most liquid crosses, more currency crosses exist that don’t even include the U.S. dollar, euro, or the yen!

We’ll call these the “Obscure Currency Crosses”!

If we were in school – come to think of it, we actually are in school! – the major pairs would be the jocks while the obscure currency crosses would be the eccentric emo kids or hipsters.

That’s because most forex traders would rather hang out with the cool crowd than the obscure crosses!

We’re talking about really weird combinations like AUD/CHF, AUD/NZD, CAD/CHF, and GBP/CHF. That’s why we call them obscure crosses.

Trading in these pairs can be more difficult and riskier than trading euro or yen currency crosses.

Since very few forex traders trade them, transaction volume is much lower resulting in lower liquidity.

Due to the illiquid markets for these crosses, their prices can become quite volatile, so being stopped out on whipsaws can become a common occurrence.

Check out these screenshots of AUD/CHF and GBP/CHF:

You don’t want to get stopped out by those nasty spikes, do you? That’s why most forex traders usually put wider stops when trading these pairs.

But judging from the choppy movement of obscure crosses, it would really be tough to catch a good trade on these pairs.

See what we mean?

Also, since these currency cross pairs aren’t traded too much by forex traders, the spreads on these pairs can be pretty wide.

If you want to trade these currency crosses, just be ready for some wild price swings and be willing to pay the price of the massive spread!

Reprinted from Babypips，the copyright all reserved by the original author.