The foreign exchange market is susceptible to a series of factors that affect its volatility, and many traders want to adjust their strategies to take advantage of forex pairs with the most volatility.
Volatility is typically calculated using the currency's standard variance or deviation, Traders can therefore estimate how far a currency will vary over time from its present value. The greater the currency's volatility, the greater the risk. Risk and volatility are often used in interchangeable terms.
What is the volatility in forex
The volatility is different in the numerous currency pairs. The most important currency pairs such as EUR/USD, GBP/USD, USD/JPY and USD/CHF are generally less volatile than emerging-market currency pairs such as USD/KRW, USD / ZAR and USD/BRL. In general, there is less volatility for more liquidity in currency pairs.
Some traders are more likely to benefit from trading volatile forex pairs, but higher potential returns are more risky, and therefore traders should resize their position in highly volatile currency pairs.
The most volatile currency pairs
  • AUD/JPY (Dollar of Australia/ Yen of Japan)
  • AUD/GBP (Dollar of Australia/ Pound Sterling)
  • AUD/USD (Dollar of Australia/ US Dollar)
  • NZD/JPY (Dollar of New Zealand/ Yen of Japan)
  • CAD/JPY (Dollar of Canadian/ Yen of Japan)
All the volatile currency pairs are not only the major currencies but also those from emerging-markets, like USD/KRW, USD/ZAR, USD/BRL, USD/HUF and USD/TRY
USD / ZAR, USD / KRW, USD / BRL and other emerging-market forex pairs are usually low liquidity and highly volatile due to the risks inherent in economies of emerging market.

How to make trading with volatile currency pair 
Traders in volatility trading should take into account the current volatility and its potential changes. Traders also need to resize their position to reflect the currency pair volatility. As the currency pair get higher in volatility, the trader's position should be smaller. Check out the best forex brokers with low spreads.

High volatility trading vs low volatility trading
  • Over a period of time, highly volatile currencies usually change more pips than less volatile currencies. This results in increased risk in trading high volatile forex pairs
  • High volatility currencies are more vulnerable to slip than low volatility currency pairs.
  • Because of the greater volatility of the currency pairs, it is necessary to decide the right position size when trading.
Volatility can be calculated in several ways
To decide the exact position size, traders must anticipate how volatile the currency will be. Various indicators for measuring volatility can be used, for example:
  • Donchian channels
  • Average True Range (ATR)
  • Moving average
Key things to consider about volatility trading
  • Major news events such as Trade War or Brexit can lead to a big impact on currency volatility. It can also be affected by data release. Traders can use economic schedules to stay ahead of data releases.
  • Volatile forex pairs still adhere to technical aspects of the trade, such as price patterns, trend lines,  resistance and support levels. Traders can use technical analysis combined with strict concepts of risk management to benefit from volatility.
  • Stay up-to-date with the newest Forex news, prices and  analysis to predict the likelihood of changes in volatility.
If you are ready, start trading with the best trading platforms now.