trader can face when trading in volatile financial instruments is a wide spread (additional trading expenses). You're probably familiar with such a concept as «volatility». What affects the volatility of currency pairs? The main reason for volatility is liquidity. Additional drivers of volatility include inflation, government debt, and current account deficits; the political and economic stability of the country whose currency is in play will also influence FX volatility. After doing so, we will obtain the following results in the form of 3 diagrams: These diagrams show an average volatility of NZD/USD currency pair for every day since 1 July. As well, currencies not regulated by a central bank - such as Bitcoin and other cryptocurrencies - will be more volatile since they are inherently speculative. On the other hand, when major economic data release or officials speak, the market price makes sharp and strong moves.
Oanda fx volatilità
In order to visually illustrate the non-constant nature of volatility lets look at the Forex Volatility Calculator. CAD/CHF.42.67, cAD/JPY.60.78, cHF/JPY.42.62, eUR/AUD.56.62, eUR/CAD.84.63, eUR/CHF.66.53, eUR/GBP.22.55. Also it shows an average hourly volatility and volatility by days of the week as well. The volatility of a pair is measured by calculating the standard deviation of its returns. Only GBP/USD, USD/JPY and USD/CAD move for more than 100 points per day. After the data is displayed, click on a pair to see its average daily volatility, its average hourly volatility, and a breakdown of the pairs volatility by day of the week). It fully coincides with the time of economic data release for the USA and New Zealand. However, it isnt quite so simple. Finally, crosses (pairs which do not include the US dollar) and exotic crosses (pairs that include a non-major currency also tend to be more volatile and to have bigger ask/bid spreads. The broader the scope of the price variation, the higher the volatility is considered. All you need to do before you start using the tool is to enter time period, over which you need to measure volatility, in weeks. At the top of the page, choose the number of weeks over which you wish to calculate pairs volatility.