Exotic Currency Pairs to Trade in Forex

In forex trading, exotic currency pairs mix a major currency with one from a smaller or emerging country. These currency pairs in forex offer unique chances but also come with more risks than popular major or minor pairs. In this blog, we’ll look at what exotic currency pairs are and how you can trade them safely.

What are Currency Pairs?

Currency pairs in Forex are two different types of money from two countries that are traded together. In simple words, it means you exchange one currency for another. This is how trading happens in the Forex market.

Every forex currency pairs has two parts:

• The base currency (the first one)
• The quote currency (the second one)

The base currency is the one you want to buy or sell. The quote currency tells you how much you need to pay to get one unit of the base currency.

Example:
Let’s say you are trading EUR/USD.

• EUR (Euro) is the base currency.
• USD (US Dollar) is the quoted currency.

If the rate is 1.20, it means 1 Euro = 1.20 US Dollars. So, to buy 1 Euro, you need 1.20 Dollars. This is how currency pairs in Forex help people trade money from different countries easily.

Types of Currency Pairs in Forex

In the Forex trading in the UAE market, currency pairs in Forex are divided into three main types: major, minor, and exotic. Let’s understand the first two types.

Major Currency Pairs in Forex

Major currency pairs are the most popular and most traded currency pairs in the world. These pairs always include the US Dollar (USD). Because many people trade these pairs every day, they are easy to buy and sell. This is called high liquidity. Also, the cost of trading them is low, because the spread (difference between buying and selling price) is small.

Here are the 7 major forex currency pairs:

• EUR/USD – Euro / US Dollar
• USD/JPY – US Dollar / Japanese Yen
• GBP/USD – British Pound / US Dollar
• AUD/USD – Australian Dollar / US Dollar
• USD/CHF – US Dollar / Swiss Franc
• USD/CAD – US Dollar / Canadian Dollar
• NZD/USD – New Zealand Dollar / US Dollar

These pairs are linked with strong economies like the USA, Europe, Japan, UK, Canada, Australia, and New Zealand.

Minor Currency Pairs in Forex

Minor currency pairs, also called cross currency pairs, do not include the US Dollar. These pairs are made by trading two other major currencies. They are also popular, but not as much as the major pairs. That’s why they have a bit higher trading cost than the major ones.

Here are some examples of minor currency pairs:

• EUR/GBP – Euro / British Pound
• EUR/AUD – Euro / Australian Dollar
• GBP/JPY – British Pound / Japanese Yen
• AUD/JPY – Australian Dollar / Japanese Yen
• EUR/CAD – Euro / Canadian Dollar
• NZD/JPY – New Zealand Dollar / Japanese Yen
• GBP/AUD – British Pound / Australian Dollar

Minor pairs still offer good trading options for people who want to explore beyond the US Dollar.

What is an exotic forex pair?

Exotic currency pairs in Forex trading are made of one major currency (like the US Dollar or Euro) and one currency from a smaller or developing country. These currencies are not traded as much as major or minor pairs.

Because fewer people trade these pairs, they have lower liquidity (not easy to buy or sell quickly) and higher spreads (more cost to trade). This means exotic pairs are riskier and may change in price more suddenly.

But for some traders, exotic pairs also give chances to make big profits if they understand the risks.

Here are some examples of exotic forex currency pairs:

• USD/TRY – US Dollar / Turkish Lira
• EUR/TRY – Euro / Turkish Lira
• USD/SGD – US Dollar / Singapore Dollar
• EUR/THB – Euro / Thai Baht
• USD/ZAR – US Dollar / South African Rand
• USD/HKD – US Dollar / Hong Kong Dollar
• USD/PLN – US Dollar / Polish Zloty

These pairs are useful for traders who want to explore new markets and have experience handling higher risk. 

What to Know Before Trading Exotic Currency Pairs

Exotic forex currency pairs can be exciting, but they come with more risks. Before trading them, here are a few important things to understand:

• Higher Risk: Exotic pairs move up and down quickly. This means bigger chances for profit, but also bigger chances for loss.
• Lower Liquidity: Not many people trade these pairs daily, so they’re harder to buy or sell fast without losing money.
• Higher Costs: The spread (difference between buy and sell price) is usually bigger, so trading costs more.
• Sensitive to News: Exotic currencies react strongly to world news, US interest rate changes, and market mood. In risky times, traders prefer safer currencies like USD or JPY.

A 2016 study by the Bank for International Settlements showed that EUR/USD made up 23.1% of trades, while an exotic pair like USD/RUB had only 1.1%, showing they’re much less traded.

Tip: Beginners should practice with major pairs before trying exotic ones.

How to Trade Exotic Currency Pairs

You can trade exotic forex currency pairs in forex with almost any Forex trading broker. When you open a trading account, many regulated forex brokers give you access to platforms like MetaTrader 4, where you can trade over 40 forex currency pairs, including exotic ones.

Before trading, it’s important to do your homework. Use fundamental analysis (looking at economic news and events) and technical analysis (studying price charts) to decide when to buy or sell.

Steps to Trade Exotic Currency Pairs

• Open a demo or live trading account with a broker.
• Download and install MetaTrader 5 or another trading platform.
• Find the exotic currency pair you want to trade (like USD/TRY or EUR/THB).
• Click on “New Order” or “Trade”.
• Enter the amount (volume) you want to trade and choose the type of order.
• Add stop-loss (to limit loss) and take-profit (to secure profit) if you want.
• Choose Buy (if you think price will go up) or Sell (if you think price will go down).

That’s it! Your trade will start, and you can watch the price move.

Exotic Currency Trading Strategies

There are many ways to trade exotic currency pairs in Forex. No single strategy is always the best. The right method depends on the market, the currency, your goals, and how long you want to keep your trade open.

The Forex trading market is always changing. What works well today might not work tomorrow. That’s why it’s smart to learn different Forex trading strategies and pick one that fits your style. Start by focusing on one currency pair until you get confident before trying others.

Here are four popular trading styles used in exotic currency trading, based on how long you keep your trade:

1. Scalping Trading

Scalping is very fast trading. You hold positions for just seconds or minutes. This strategy uses only technical analysis (price charts and patterns) because news doesn’t affect such short time frames. Scalpers need a broker with low fees and quick order execution to make many small trades that add up to profit.

Example: Buying USD/TRY and selling it after a few minutes when the price moves a small amount to make quick profit.

2. Day Trading

Day traders hold trades only during the day and close all positions before the market closes. They mainly use technical analysis, but can react to important news too. Like scalpers, they need fast trade execution and low costs to succeed.

Example: Buying EUR/THB in the morning and selling it by the afternoon after a price rise caused by a local economic report.

3. Swing Trading

Swing traders hold positions for several days or weeks. They use both technical and fundamental analysis (looking at news and economic data). This style is good for traders who want to trade part-time because they don’t need to watch the market constantly.

Example: Buying USD/ZAR and holding it for two weeks, expecting the South African Rand to weaken due to political news.

4. Position Trading

Position trading is for the long term. Trades last for months or even years. It mostly relies on fundamental analysis, like studying a country’s economy. This style is like traditional stock investing. When using this method, it’s important to choose a reliable broker who stays open for a long time.

Example: Buying USD/SGD and holding for several months because you expect Singapore’s economy to grow slower than the US.

Pros and Cons of Trading Exotic Currency Pairs

Trading exotic currency pairs in Forex has both advantages and disadvantages. These pairs are interesting because they come from smaller or less common economies, but they also have risks.

Before trading exotic pairs, check these pros and cons:

Pros:

• Different Market Moves: Exotic pairs often do not follow the same trends as big currencies like the US dollar. This can help you protect your money if other markets go down.
  
  Example: USD/TRY might move differently than EUR/USD during global events.
  
• More Profit Chance: Prices in exotic pairs can change a lot in a short time. This means you have a better chance of earning more money if you trade carefully.

Cons:

• Harder to Buy or Sell Quickly: Because fewer people trade exotic currency pairs in Forex, it might be harder to get the price you want when buying or selling.
  
  Example: Trying to sell USD/ZAR fast might not get you the best price.
  
• Costs Are Higher: The difference between buying and selling prices (spread) is bigger. This means trading costs more, so you need extra money to make a profit.
  
• Big Price Swings: The price can move up and down quickly and without warning. This can lead to big losses if you are not careful.
  
• Risk of Sudden Currency Drops: Some countries may change their money rules suddenly, which can make their currency lose value fast.
  
  Example: A political change in Turkey could quickly lower the Turkish Lira’s value against the dollar.
  

Should You Trade Exotic Currencies?

If you are new to forex trading, it is better to avoid exotic currency pairs in forex at the start. These pairs are less traded (less liquid), and their spreads (trading costs) are usually higher than major or minor pairs. This means it can be harder and more expensive to trade them.

Begin your trading journey with major or minor currency pairs because they have more buyers and sellers, making trading easier and cheaper. Once you gain enough experience and understand the risks, you can try trading exotic pairs. They can be more rewarding but also come with bigger risks.

Which Currencies Should You Trade Exotic Currencies Against?

Exotic currency pairs in forex trading in UAE are almost always traded against major currencies like the US dollar or the euro. This is because exotic-to-exotic currency pairs are very rare and hard to trade due to very low market activity.

For example, the Turkish Lira is usually paired with the Euro (EUR/TRY) or the US Dollar (USD/TRY). Similarly, the South African Rand is commonly traded against the US Dollar (USD/ZAR). Trading exotic currencies against major ones helps ensure there are enough traders on both sides, so you can easily buy or sell.

Where Can Someone Trade Exotic Currency Pairs?

You can trade exotic currency pairs in Forex trading in the UAE through many regulated forex brokers. Some regulated forex brokers offer more exotic pairs than others. For example, with regulated forex brokers like EoneFx, you get access to over 40 exotic pairs to trade. Spreads can vary a lot—from very small (like 1.2 pips) to quite large (over 100 pips)—depending on the pair and market conditions.

Before choosing a broker, check which exotic pairs they offer and compare spreads and fees. This will help you trade smarter and reduce your costs.

Conclusion

Forex trading in the UAE with exotic currency pairs can offer exciting opportunities beyond the usual major and minor pairs. However, they come with higher risks like low liquidity and bigger price changes. To trade these pairs successfully, it’s important to learn about their behavior, use smart trading strategies, and manage your risks well. Many traders use platforms like EoneFX, which provides access to a wide range of exotic pairs with reliable tools and support. Always start with careful research and practice to make the most of trading exotic currencies.