Introduction

If you are day trading the forex markets, or like to trade commodities, cryptocurrencies or stock market indexes, for example, it is always useful to know which markets are showing high levels of volatility and trading in a wide range on a daily basis.

That’s because a market that is moving in a range of 200 pips per day will be a lot easier to capture decent sized profits from than a market that is only moving around 20 pips per day on average, for instance, particularly when you factor in spreads and commissions.

So with that in mind, let’s take a look at the latest average true range (ATR) readings of all of the major currency pairs, indices, commodities, metals and cryptos as of right now (11 June 2023) as we head into the quieter summer period.

This will tell you which markets are potentially worth day trading, and which ones are probably best avoided.

Major Currency Pairs

• AUD/NZD – 57
• AUD/USD – 58
• EUR/CHF – 40
• EUR/GBP – 37
• EUR/JPY – 94
• EUR/USD – 51
• GBP/EUR – 49
• GBP/JPY – 118
• GBP/USD – 81
• USD/CAD – 65
• USD/CHF – 61
• USD/JPY – 90

There is no doubt that the average true range of these forex pairs has fallen since I last compiled this data back in 2020, but that’s to be expected because that was a very volatile period as COVID was just starting to take hold all over the world.

The reality is that there are plenty of currency pairs that still offer a good deal of price movement every day, and are therefore potential trade candidates.

I myself like to mainly trade the GBP/JPY and GBP/USD pairs because they have a wide daily trading range, 118 and 81 pips respectively, as shown here, and I’m also predominantly based in the UK, which means I can trade the busy London and New York sessions.

I also used to like to trade the EUR/USD pair but this seems to move less than before, just 51 pips, and I find that the GBP pairs give me more than enough opportunities every week.

For those traders based in Asia, the major Yen pairs all provide lots of liquidity and volatility, and benefit from tight spreads, while traders based in Australia or New Zealand may also prefer to trade these pairs because of the favorable time zone and the fact that these are more volatile than the Australian and New Zealand dollar pairs.

USA-based traders are lucky because many of the USD pairs offer big price swings every day, especially the GBP/USD and USD/JPY pairs, but many of the currency pairs are very active during the US session, so most of the major pairs can potentially be traded profitably at this time.

Stock Market Indices

• FTSE 100 – 58
• DAX – 123
• DOW JONES – 269
• S&P 500 – 40
• NASDAQ 100 – 195

With the S&P 500 hanging out in the 4050-4150 range for several weeks and seeming reluctant to fall back down, the volatility of this index fell sharply, and now has a daily average price movement of just 40 points.

This has made it noticeably harder for many day traders to trade because there have been a lot of sideways price movements in recent months, which will often chop you up.

The other indices have also experienced narrower trading ranges, with the Nasdaq 100 almost half as volatile (195 points) as it was this time last year, for example.

That’s to be expected when we experience rising stock markets, but it’s not necessarily beneficial to day traders, who can often generate more profits when the markets are falling, or at least fluctuating up and down a lot more.

Commodities

• BRENT CRUDE – 225
• US CRUDE – 236
• GOLD- 23
• SILVER – 48

Gold, and to a lesser extent silver, often present day traders with plenty of volatity, and that’s still the case now. With a daily range of $23, gold still continues to trade in quite a wide range on a daily basis.

As you can see below, the oil markets have calmed down a lot since a year ago, when they were moving an average of 500 points per day, but I find that they still offer lots of good trading opportunities with a trading range in excess of 200 points per day.

Cryptocurrencies

• BITCOIN – 861
• ETHEREUM – 58

There was a time when day trading cryptos was practically impossible because of the prohibative spreads, but with a daily trading range of 861 points on Bitcoin, for example, and much tighter spreads, it is now possible to generate profits from these daily price movements.

I don’t attempt to do so myself, but I know a few people who find that their usual day trading strategies work just as well, if not better on these instruments.

Final Thoughts

It is often said that scalpers should look to capture around 10% of the daily average true range (ATR) per trade, while proficient swing traders should look to capture up to 40% of the average range.

So despite the fact that we are entering one of the quietest periods of the year when many people will be taking vacations and enjoying the summer, there is still plenty of volatility in the markets to keep day traders satisfied.

I like to focus my attention on the GBP/JPY and GBP/USD pairs, as well as gold and US crude oil, but with average trading ranges of 195 and 269 points on the Nasdaq and DJ30 respectively, it’s easy to see why some traders focus on the indices instead.

Ultimately it comes down to your own personal trading strategy and what works for you, but finding the markets with the highest volatility will often help you in your quest to generate consistent returns.

Volatility in 2020

Every year I take a look at the average daily trading range of not only the various different currency pairs, but also a variety of other markets such as stock market indices, commodities and cryptocurrencies.

This is useful to know because it can tell you which markets currently have low volatility, and are therefore possibly worth avoiding from a trading perspective, and which markets are moving the most on a day to day basis and providing a lot more trading opportunities.

This information takes on greater significance in a year like this when we have had a major global pandemic wreaking havoc on the markets.

So as we are now nearly halfway through the year and starting to see economies return to some sort of normality, now is a great time to look at the ATR (average true range) of these markets (as of 15 June 2020) to see how they have each been affected:

AUD/NZD – 60
AUD/USD – 91
EUR/CHF – 57
EUR/GBP – 59
EUR/JPY – 99
EUR/USD – 78
GBP/JPY – 141
GBP/USD – 107
USD/CAD – 108
USD/CHF – 64
USD/JPY – 63

FTSE 100 – 143
DOW JONES – 635
S&P 500 – 67
NASDAQ – 210

BRENT CRUDE – 214
US CRUDE – 153
GOLD – 22

BITCOIN – 390
BITCOIN CASH – 11
ETHEREUM – 12
RIPPLE – 1
LITECOIN – 2

Currency Pairs

If we start with the currency pairs, it is not entirely clear just from these numbers, but volatility has slowly gone back to previous levels.

There was a big spike up in March and April for all of the major forex pairs as trading volumes surged and prices moved strongly in both directions as panic buying and selling hit the markets, but this volatility as since subsided as we enter the summer trading months, which are traditionally less volatile anyway.

Another surge in volatility cannot be ruled out, particularly if we see a second wave of infections and / or another series of lockdowns, but for now the major pairs are experiencing less daily movements than a few months ago.

The GBP/JPY is still one of the most popular pairs amongst traders with an average daily trading range of 141 pips, but the GBP/USD and USD/CAD are both good markets to day trade or swing trade with a daily movement in excess of 100 pips, and the EUR/JPY and AUD/USD are also fairly volatile right now as well.

Stock Market Indices

With regards to the major world markets, we have seen a much more pronounced upswing in volatility, which remains to this day.

The S&P 500 currently has a trading range of 67 points, which means that it is averaging a swing of more than 2% every day, while the Dow Jones has a staggering average trading range of 635 points, making it very popular with day traders.

Even the FTSE 100 is moving 143 points per day, whereas it would typically move a lot less than 100 points under normal market conditions.

So the indices are well worth considering for those short-term traders who want more movement or volatility than many of the forex pairs can offer.

(If we fast forward to 2023, we can see that 2020 was very much a golden year for day traders of stock market indices because as of June 2023, the S&P 500 was averaging 40 points per day (27 points less than 2020), while the Dow Jones, for example, now moves an average of 269 points compared to 635 points previously and the FTSE 100 index now moves an average of 58 points compared to 143 points in 2020).

Commodities

Many long-term investors turn to safe haven commodities when the market is dropping (or sell their existing gold holdings to invest into beaten up stocks). So it is no surprise that gold is now quite a high volatility market with an average range of 22 points.

Similarly, with the collapse of the oil price and the subsequent recovery as economies start to open up again, the volatility of the oil markets has gone up dramatically since the start of the year, although it has started to fall since the peak in March and April.

Cryptocurrencies

The major cryptocurrencies are notoriously unpredictable and will see spikes in volatility throughout the year, but these too have been affected by the global pandemic.

There was a big sell-off in March across the whole crypto sector which obviously led to a big increase in volatility, but there was another upward swing last month, and even now Bitcoin, for example, is still moving 390 points per day on average.

Of course this alone doesn’t make it a great day-trading instrument because spreads are still fairly large with most brokers, but it is still worth noting how much this market moves, even if you are a long-term buy and hold investor.

Closing Comments

2020 has been a very bad year for many long-term investors, but for short-term swing traders and day traders, it has provided plenty of opportunities with lots of wild price swings every day.

The markets have certainly calmed down a little, particularly the forex markets, but it is clear from the average daily trading range figures above that there is still more than enough volatility in the stock market indices, commodities and crypto markets for people to potentially make money.

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.