If you are looking to day trade the major currency pairs, it is imperative that you try to trade those pairs that have a decent amount of volatility.
That’s because you will generally find that it is so much easier to trade a pair that trades within a large trading range every day and makes strong moves upwards or downwards, rather than one that barely moves and has limited price swings.
So with that in mind, I want to take a look at the average daily trading range of all of the major forex pairs right now in May 2018 because this will give you an idea of which pairs are worth day trading (keep reading to view the latest figures for October 2018).
Here is the latest ATR (average true range) reading for all of these pairs, and for some of most popular indices, commodities and cryptocurrencies:
AUD/USD – 49
EUR/CHF – 67
EUR/GBP – 43
EUR/USD – 78
GBP/USD – 84
GBP/JPY – 123
USD/CAD – 76
USD/CHF – 48
USD/JPY – 63
FTSE 100 – 67
DOW JONES – 239
NASDAQ – 85
S&P 500 – 25
BRENT CRUDE – 140
CRUDE OIL – 129
BITCOIN – 379
BITCOIN CASH – 114
ETHER – 47
LITECOIN – 9
With regards to the currency pairs, the AUD/USD, EUR/GBP and USD/CHF are some of the hardest to trade, as is so often the case, because these all have trading ranges of less than 50 pips, which makes it very hard to consistently make money from short-term trades when you take account of the spreads per trade.
However there are several pairs that have trading within decent trading ranges. The GBP is very volatile at the moment, so many GBP pairs are worth a look, and the EUR/USD and USD/CAD pairs also have an average trading range of 78 and 76 points respectively, which is not bad at all.
Elsewhere, the Dow Jones has an average trading range of 239 points, which means you could potentially make some decent returns if you call the direction right, and the oil markets have also been quite volatile in recent days, which presents some decent short-term trading opportunities.
Finally, the major cryptocurrencies have taken a hit in recent weeks and have decent trading ranges, but until the spreads tighten up considerably, they are not really a viable day trading instrument at the moment.
Updated Trading Ranges for October 2018
I have just been looking at the very latest trading ranges right now in October 2018, and if you compare the latest figures to the figures from May (shown in brackets), there are some interesting findings:
AUD/USD – 46 (49)
EUR/CHF – 55 (67)
EUR/GBP – 43 (43)
EUR/USD – 64 (78)
GBP/USD – 90 (84)
GBP/JPY – 118 (123)
USD/CAD – 63 (76)
USD/CHF – 45 (48)
USD/JPY – 57 (63)
FTSE 100 – 93 (67)
DOW JONES – 343 (239)
NASDAQ – (138) 85
S&P 500 – 37 (25)
BRENT CRUDE – 171 (140)
CRUDE OIL – 155 (129)
BITCOIN – 162 (379)
BITCOIN CASH – 25 (114)
ETHER – 10 (47)
LITECOIN – 2 (9)
You will immediately notice that the average daily trading range is roughly the same for all the major currency pairs.
In fact in almost every case the volatility has reduced ever so slightly. The only exception is the GBP/USD which currently has an increased average trading range of 90 points, making it a good pair for day traders to trade.
It is the other figures that really stand out. You will see that after the heavy stock market falls, volatility has increased by around 50% on the major US stock markets and the FTSE 100, as shown in the chart below:
Similarly, as a result of the recent fall in oil prices, the volatility of Brent and US crude oil has also increased quite considerably, although not quite as much as the major stock markets.
Finally, it is interesting to look at the latest figures for some of the major cryptocurrencies because you can see that volatility has dropped off massively since May.
Bitcoin now has an average range of just 162 points right now, making it almost impossible to day trade because of the large spreads offered by many brokers, while the other cryptos quoted are approximately 25% as volatile as they were earlier in the year.
So at this moment in time, it is the oil markets and the major stock market indices that are the most volatile, and therefore the most suitable for day traders to trade right now.
If you are interested in day trading, 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.