If you are day trading the forex markets, it is important that you trade those currency pairs that have tight spreads first of all, but it is also a good idea to trade the more volatile pairs that have large average trading ranges every day because this will make it a lot easier to generate consistent profits.
Similarly, if you are considering trading other markets on a short-term basis, you also need to look at how many points they tend to move on average per day, in order to weigh up whether or not they are worth trading.
So just as I did last year, I thought it might be useful to once again list the average daily trading range of all the major currency pairs, as well as all of the most popular indices, commodities and cryptocurrencies (as of 30 January 2019):
AUD/NZD – 52
AUD/USD – 53
EUR/CHF – 43
EUR/GBP – 64
EUR/JPY – 77
EUR/USD – 56
GBP/JPY – 131
GBP/USD – 101
USD/CAD – 62
USD/CHF – 46
USD/JPY – 56
FTSE 100 – 82
DOW JONES – 322
S&P 500 – 33
NASDAQ – 107
BRENT CRUDE – 164
US CRUDE – 153
GOLD – 9
BITCOIN – 137
BITCOIN CASH – 10
ETHEREUM – 7
RIPPLE – 2
LITECOIN – 2
(all figures quoted have been rounded up or down to the nearest whole number)
Starting with the main forex pairs, it is clear that the GBP/JPY and GBP/USD pairs both look particularly appealing to short-term traders right now because they both have an average daily trading range of over 100 pips.
However much of this volatility is due to the ongoing uncertainty surrounding Brexit, so day traders need to be wary of any breaking news when trading these or any other GBP pairs.
Apart from these pairs, many of the major currency pairs have an average trading range of around 50-70 pips, which is more than enough to be able to trade, providing that the spreads are around 2-3 pips at the most, but it is worth noting that nearly all of them have seen their average trading range go down a little in recent weeks, including the EUR/USD pair, as you can see in the chart below:
It could be argued that the indices are the main markets that day traders should consider trading right now because these have very large average daily trading ranges at the moment.
The Dow Jones typically moves 322 points per day and the NASDAQ typically moves over 100 points per day, while even the FTSE 100 tends to move 82 points per day, which is a lot higher than it is usually.
With regards to the oil markets, these have always been very popular markets to trade for day traders, and with an average range of over 150 points for both Brent and US Crude, they are still very tradable right now.
Finally, it is worth noting that the major cryptos are still not really suitable for day trading because of the low volatility of these instruments and the large spreads.
Even though Bitcoin has a daily trading range of 137 points, a typical spread of 30-50 makes it almost impossible to make consistent short-term profits, and it is a similar story with many of the other cryptos as well.
Anyway I hope you found this information useful.
understanding forex volatility
I will update this page with the latest average trading ranges throughout 2019 to give you an idea of which forex pairs and which markets are the most volatile, and therefore potentially the most profitable to trade at any given time.
If you are interested in day trading yourself, it is important to use a broker that has tight spreads and fast execution, and FXTM satisfies both of these criteria, with spreads starting from 0.1 points on ECN accounts and 0.5 points on Standard accounts.
Latest Trading Ranges in May 2019
It is always interesting to see how the markets have evolved, and which instruments seem to be the most volatile (and therefore potentially the best ones for trading) at any given time.
So with that in mind, here are the latest trading ranges for all of the currency pairs, stock markets, commodities and cryptocurrencies listed above, along with the previous trading ranges from January (shown in brackets):
AUD/NZD – 46 (52)
AUD/USD – 44 (53)
EUR/CHF – 38 (43)
EUR/GBP – 41 (64)
EUR/JPY – 60 (77)
EUR/USD – 45 (56)
GBP/JPY – 88 (131)
GBP/USD – 75 (101)
USD/CAD – 60 (62)
USD/CHF – 38 (46)
USD/JPY – 44 (56)
FTSE 100 – 61 (82)
DOW JONES – 246 (322)
S&P 500 – 26 (33)
NASDAQ – 91 (107)
BRENT CRUDE – 135 (164)
US CRUDE – 131 (153)
GOLD – 9 (9)
BITCOIN – 209 (137)
BITCOIN CASH – 22 (10)
ETHEREUM – 9 (7)
RIPPLE – 1 (2)
LITECOIN – 5 (2)
Starting with the major currencies, it is immediately obvious by comparing the latest average trading ranges with those from January that the forex markets have generally become a lot less volatile.
Every single currency pair is trading within a smaller range on a daily basis, and it is noticeable that the GBP pairs in particular are significantly less volatile than they were before.
This is probably due to a stalemate in the whole Brexit affair and a long and lengthy delay that is pretty much guaranteed.
It is not just the forex pairs that have become less volatile. The world’s major stock markets are trading within smaller ranges on a daily basis, as indeed are the oil markets.
The only exception is gold, which is still moving around 9 points per day, as it was before.
The most interesting finding from these latest figures is that the major cryptocurrencies appear to have become a lot more volatile than before. However when you consider that many of them have risen sharply in recent months, they are probably about the same in relative terms.
So I wouldn’t necessarily start assuming that cryptos are the top trading instruments for day traders right now.
Even though many of the markets are trading in smaller ranges as we approach summer, these will always be some of the best markets to trade because they have much tighter spreads. They are just a little harder to trade at this time of the year.
Update for September 2019
The quiet summer period is now coming to an end, although with the ongoing uncertainty surrounding Brexit, it is fair to say that the major forex pairs, particularly the British pound pairs, haven’t been as quiet and as so-moving as they have been in previous summers.
Before I discuss this any further, let me give you the updated average daily trading ranges for all of the major indices, currency pairs, commodities and cryptocurrencies (previous trading ranges from May are shown in brackets):
AUD/NZD – 49 (46)
AUD/USD – 42 (44)
EUR/CHF – 47 (38)
EUR/GBP – 69 (41)
EUR/JPY – 78 (60)
EUR/USD – 50 (45)
GBP/JPY – 136 (88)
GBP/USD – 99 (75)
USD/CAD – 61 (60)
USD/CHF – 57 (38)
USD/JPY – 67 (44)
FTSE 100 – 93 (61)
DOW JONES – 380 (246)
S&P 500 – 43 (26)
NASDAQ – 137 (91)
BRENT CRUDE – 151 (135)
US CRUDE – 159 (131)
GOLD – 21 (9)
BITCOIN – 503 (209)
BITCOIN CASH – 17 (22)
ETHEREUM – 10 (9)
RIPPLE – 2 (1)
LITECOIN – 5 (5)
Apart from the very volatile Bitcoin, which now trades within a range of over 500 points per day on average, the cryptocurrencies haven’t really increased or decreased in volatility since the last update back in May.
However you can see that many of the other markets have actually become a lot more volatile thanks to a combination of Brexit, Donald Trump, ongoing trade wars and the threat of a possible recession.
Both Brent crude oil and US crude have seen slightly higher average trading ranges towards the end of summer, while gold’s average trading range has more than doubled as a result of people moving some of their capital into this traditional safe haven.
The indices have also become a lot more volatile as a result of some fairly wild swings and a lot of uncertainty in the markets right now.
Finally, as mentioned earlier, many of the major currency pairs have also seen their average daily trading ranges go up in recent weeks and months.
This is true of the dollar and euro pairs, but it is the pound pairs that have been experiencing some large daily price moves, and that is only likely to continue as the Brexit deadline draws ever closer.
Filed Under: AnalysisTagged With: atr, average true range, daily trading range