Trading Unpopular Currency Crosses: Risks and Rewards
FOREX is probably one of the most popular assets to trade in recent years, its currency crosses can be an exciting adventure, especially if you’re looking to diversify your portfolio. But what about those less popular currency crosses that you might not have heard much about? When you think of forex trading, the first things that probably come to mind are the major currency pairs that you can find in Roboforex like EUR/USD or GBP/USD. But have you ever heard of trading something like USD/TRY (US Dollar/Turkish Lira) or NZD/SGD (New Zealand Dollar/Singapore Dollar)?
These are examples of obscure currency crosses pairs that don’t involve the US dollar and are less commonly traded.
Understanding FOREX Pairs
In the world of forex, currency pairs are categorized into three main groups: major, minor, and exotic. Major pairs include the most traded currencies globally, like EUR/USD and USD/JPY. Minor pairs don’t include the US dollar but can still involve major currencies, such as EUR/GBP.
The exotic pairs, on the other hand, involve one major currency and one less popular, like USD/SEK (US Dollar/Swedish Krona).
What Are Currency Crosses and Obscure Pairs?
So, what exactly are currency crosses? Simply put, a currency cross is a currency pair that does not involve the US dollar. For example, the EUR/GBP (Euro/British Pound) or the NZD/SGD (New Zealand Dollar/Singapore Dollar).
These crosses exist because they facilitate trading between two non-USD currencies without having to go through the USD first.
Those pairs don’t get much attention from the majority of traders. and that lack of attention can lead to less liquidity and higher volatility.
Why Trade Them?
But, why would anyone want to trade these less popular pairs? Well, the answer lies in the potential for higher rewards. You need to keep in mind that as with anything in trading, higher rewards often come with higher risks.
Some of the reasons to trade them are:
- Diversification: Trading different currency pairs can help diversify your portfolio and spread your risk.
- Opportunities: Sometimes, these unpopular pairs can present unique opportunities that aren’t present in common pairs.
- Lower Competition: Since fewer traders focus on these pairs, there might be less competition and more room for profit.
Understanding the Risks
Of course, with rewards come risks, and trading unpopular currency crosses isn’t an exception, many times it poses bigger challenges to traders.
Here are a few things to watch out for:
Liquidity Issues
Liquidity refers to how easily you can buy or sell a currency pair without affecting its price. Unpopular currency crosses tend to have lower liquidity, and this means that you might struggle to find buyers or sellers at the price you want.
This can lead to larger spreads and potential losses if not managed or calculated properly.
Volatility and Price Swings
Unpopular currency crosses can be more volatile than major pairs. This means their prices can swing dramatically in a short period, making them riskier.
While volatility can present opportunities for profit, it also increases the potential for significant losses.
Economic and Political Factors
Economic and political events can heavily influence currency pairs and when dealing with unpopular currency crosses, these factors can be an even bigger issue since the impact will be greater, as smaller or emerging market currencies can be more susceptible to sudden changes.
Strategies for Trading Obscure Currency Crosses
The strategies for trading that kind of pair are not different from a normal pair, the main difference is the reduced liquidity and that can bring major issues, I highly recommend adjusting your risk/reward ratio and reducing your risk tolerance.
The first thing you need to do is study, It’s crucial to do your research. Understand the economies of the countries involved, their political climate, and any other factors that could affect their currencies.
Second, effective risk management is key. This might include setting stop-loss orders, only risking a small percentage of your trading capital on each trade, and avoiding over-leveraging.
Technical and Fundamental Analysis
Technical analysis can be particularly useful, using indicators like moving averages, RSI, and Bollinger Bands can help you identify potential entry and exit points.
Make sure you don’t overlook fundamental analysis. Keep an eye on economic indicators, interest rates, and geopolitical events that could impact the currencies you’re trading.
Tools and Resources
Not all trading platforms offer obscure currency crosses, so you’ll need to find one that does. Also, look for platforms that give you good liquidity and tight spreads for the pairs you’re interested in.
Economic Calendars
An economic calendar is an essential tool for any forex trader. It helps you keep track of important economic events that could affect the currencies you’re trading.
News Sources
Stay informed by following reliable news sources. This can help you stay ahead of market-moving events and make more informed trading decisions.
Case Studies: Success and Failure
Let’s look at a few real-life examples of trading unpopular currency crosses:
During the political instability in Turkey, many traders capitalized on the USD/TRY pair by carefully analyzing the situation and managing risk, they were able to make significant profits as the Turkish Lira depreciated against the US Dollar.
On the other side, a ton of traders jumped into the NZD/SGD pair without proper research, only to find themselves on the wrong side of a sudden price swing caused by an unexpected interest rate change in New Zealand.
This highlights the importance of thorough research and risk management.
Other examples or case of studies:
1. EUR/CHF (Euro/Swiss Franc): This pair is known for its stability, but during the Swiss National Bank’s intervention, it experienced dramatic moves.
2. AUD/JPY (Australian Dollar/Japanese Yen): A popular carry trade pair due to the interest rate differential, but susceptible to economic changes in both countries.
Conclusion
Trading unpopular currency crosses can be both rewarding and risky. The potential for high returns is certainly appealing, but it’s important to be aware of the challenges, including liquidity issues, higher volatility, and limited market information.
So, if you’re considering trading obscure currency crosses, make sure you’re well-prepared. Do your research, manage your risk, and use the right tools and strategies. With the right approach, you could find some hidden gems in the forex market.
FAQs
What are the most obscure currency crosses?
Some of the most obscure currency crosses include USD/TRY (US Dollar/Turkish Lira), NZD/SGD (New Zealand Dollar/Singapore Dollar), and EUR/TRY (Euro/Turkish Lira).
How do I start trading currency crosses?
Start by researching the currencies and economies involved. Choose a reliable trading platform that offers these pairs, and develop a solid trading strategy that includes risk management.
What are the best strategies for managing risk?
Effective risk management strategies include setting stop-loss orders, only risking a small percentage of your capital on each trade, and avoiding over-leveraging.
Can I trade currency crosses on any platform?
Not all platforms offer obscure currency crosses, so you’ll need to find one that does. Look for platforms with good liquidity and tight spreads for the pairs you’re interested in.
Is trading currency crosses suitable for beginners?
No, but it’s not impossible. I would not recommend trading obscure currency crosses to beginners since it can be riskier than popular pairs. It’s better to start with major pairs and gain experience before venturing into more obscure crosses.
Last Updated on January 15, 2026
