Forex trading involves buying and selling of currency pairs in the global foreign exchange market. A currency pair consists of two currencies, and a trade involves buying one currency while selling the other. The value of a currency pair is determined by the exchange rate between the two currencies.
Forex trading continues 24 hours a day, five days a week, as markets around the world open and close at different times. However, not all forex pairs are closed during market hours. In this article, we will discuss what forex pairs are not closed and why traders should pay attention to them.
What are not closed forex pairs?
Forex pairs that are not closed refer to currency pairs that continue trading even when the markets are closed. These pairs are known as exotic pairs and are traded in the over-the-counter (OTC) market. The OTC market operates outside of standard market hours and is not regulated like the standard market.
Exotic pairs are typically made up of a major currency and a currency from an emerging or developing economy. These currencies are less liquid and less traded than major currencies, making them more volatile.
Examples of exotic forex pairs include the USD/TRY (US dollar/Turkish lira), USD/ZAR (US dollar/South African rand), and USD/BRL (US dollar/Brazilian real). These pairs are not closed because they are traded in the OTC market, which operates 24 hours a day, seven days a week.
Why traders should pay attention to exotic forex pairs
While exotic forex pairs are less liquid and less traded than major currency pairs, they offer traders unique opportunities. Here are some reasons why traders should pay attention to exotic forex pairs.
1. Volatility
Exotic forex pairs are often more volatile than major currency pairs. This is because they are influenced by a variety of factors, including political instability, economic instability, and natural disasters. Traders who are skilled at reading market conditions and identifying trends can profit from this volatility.
2. High returns
Exotic forex pairs often have higher spreads, which means that traders can earn more profit per trade. This is because there is less competition in the market, and traders are willing to pay more to trade these pairs.
3. Diversification
Trading exotic forex pairs can provide diversification benefits to a trader’s portfolio. This is because these pairs are not correlated with major currency pairs, which means that they tend to move independently of other assets.
4. Unique market conditions
Exotic forex pairs often have unique market conditions that can present opportunities for traders. For example, the USD/TRY pair can be influenced by political tensions between the US and Turkey, while the USD/BRL pair can be impacted by Brazil’s economic policies. Traders who are knowledgeable about these market conditions can profit from them.
Conclusion
Forex pairs that are not closed refer to exotic pairs that continue trading even when the markets are closed. These pairs are traded in the OTC market and are less liquid and less traded than major currency pairs. However, they offer traders unique opportunities, including volatility, high returns, diversification, and unique market conditions. Traders who are skilled at reading market conditions and identifying trends can profit from exotic forex pairs.
