The forex market is known for its high liquidity and volatility, making it an attractive platform for traders seeking profit opportunities. One of the critical factors that traders consider when selecting a currency pair to trade is the volatility of the pair. The volatility of a currency pair is measured by the number of pips the pair moves in a given period.
Pip is an acronym for Point in Percentage, and it is the smallest unit of price movement in the forex market. A pip is usually the fourth decimal place in a currency pair, except for the Japanese yen pairs, where it is the second decimal place. Therefore, a movement of 1 pip in a currency pair represents a change of 0.0001 in the exchange rate for most pairs or 0.01 for yen pairs.
The forex market is open 24 hours a day, five days a week, with trading sessions in different time zones. As a result, some currency pairs are more active in some trading sessions than others, leading to different levels of volatility. In this article, we will explore which forex pair moves the most pips.
EUR/USD
The EUR/USD currency pair is the most traded pair in the forex market, representing the eurozone’s economy and the United States of America’s economy. The pair accounts for about 28% of the total forex market turnover, making it the most liquid pair. The EUR/USD pair is often referred to as the ‘fiber’ in the forex market.
The EUR/USD pair is known for its high liquidity and tight spreads, making it a popular choice among traders. The pair is also highly volatile, and it moves an average of 70-100 pips per day. The pair is most active during the European and American trading sessions, with the highest volatility occurring during the overlap between the two sessions.
GBP/USD
The GBP/USD currency pair, also known as the ‘cable,’ represents the British pound’s value against the US dollar. The pair is the second most traded currency pair in the forex market, accounting for about 14% of the total forex market turnover.
The GBP/USD pair is known for its high volatility, and it moves an average of 80-120 pips per day. The pair is most active during the London and American trading sessions, with the highest volatility occurring during the overlap between the two sessions.
USD/JPY
The USD/JPY currency pair represents the value of the US dollar against the Japanese yen. The pair is the third most traded currency pair in the forex market, accounting for about 14% of the total forex market turnover.
The USD/JPY pair is known for its high liquidity and low volatility compared to other major currency pairs. The pair moves an average of 30-50 pips per day, making it a less volatile pair than the EUR/USD and GBP/USD pairs. The pair is most active during the Asian and American trading sessions, with the highest volatility occurring during the overlap between the two sessions.
USD/CHF
The USD/CHF currency pair represents the value of the US dollar against the Swiss franc. The pair is often referred to as the ‘swissy’ in the forex market. The pair accounts for about 5% of the total forex market turnover.
The USD/CHF pair is known for its high liquidity and low volatility compared to other major currency pairs. The pair moves an average of 30-50 pips per day, making it a less volatile pair than the EUR/USD and GBP/USD pairs. The pair is most active during the European and American trading sessions, with the highest volatility occurring during the overlap between the two sessions.
Conclusion
In conclusion, the forex market offers a variety of currency pairs with different levels of volatility. Traders must consider the volatility of a currency pair before deciding to trade it. The EUR/USD and GBP/USD pairs are the most volatile pairs, moving an average of 70-120 pips per day, while the USD/JPY and USD/CHF pairs are less volatile, moving an average of 30-50 pips per day. However, the liquidity and volatility of a currency pair can change depending on the trading session, news events, and economic data releases. Therefore, traders should always keep an eye on the market and adjust their trading strategies accordingly.
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