As a day trader volatility is you friend, a friend you cannot afford to trade without. In its basic definition, volatility is simply the amount of price change with relation to time. Volatile currency pairs have various price swings ( price changes ) during a small period of time ( one day ). These price swings are what a day trader lives on. In the forex market volatility many times comes hand in hand with liquidity. The most liquid pairs are the ones that are the most volatile. The big 4: EUR / USD, GBP / USD, USD / JPY and USD / CHF are the most liquid pairs that provide the best volatility and hence opportunity for the forex day trader. Within these four pairs, the GBP / USD is the most volatile. Although it is not the most liquid ( the EUR / USD is ), but it is the most volatility. This pair, traded with the right broker ( one that provides a 3 pip spread ) can present many profitable opportunities for the astute day trader.
In conclusion, the forex day trader has to be prepared not only with the basic day trading rules, skills and principles. His job is to incorporate into his trading the characteristics and uniqueness of the forex market. Remember, every currency pair might present different opportunities and it is your job to always focus on the ones that best fit the purpose and objectives of day trading. I hope to have contributed to your forex trading education and I thank you for taking the time to read this article.
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