Low liquidity can increase volatility and make it difficult to execute trades.
For low-liquidity currency pairs, consider using smaller trade sizes.
Trade during low-volatility periods to minimize price movements.
Select currency pairs with less extreme price fluctuations for better stability.
Avoid sudden market movements due to economic news and announcements.
Set clear entry and exit strategies to manage risks effectively.
Keep an eye on liquidity levels in real-time to adjust your trading strategy.
Don’t over-leverage your account with low liquidity, as this can lead to significant losses.
Consider using automated trading tools to take advantage of small price movements.
Continuously monitor the market and be prepared for changing conditions.
Develop a longer-term perspective and be patient with your trades.
Trading Forex Currency Pairs with Low Liquidity on Plus500: A Personal Experience
As a trader, I’ve always been drawn to the thrill of trading forex currency pairs with low liquidity. It’s like navigating through uncharted waters, where the rewards are great, but the risks are even greater. In this article, I’ll share my personal experience of trading forex currency pairs with low liquidity on Plus500, a popular online trading platform.
Understanding Low Liquidity Currency Pairs
Before we dive into my experience, let’s understand what low liquidity currency pairs mean. Low liquidity currency pairs are those that have a lower trading volume compared to more popular pairs like EUR/USD or USD/JPY. These pairs often have wider spreads, making it more challenging to enter and exit trades.
Currency Pair
Trading Volume (Daily Average)
EUR/TRY
10,000 – 20,000 lots
USD/MXN
15,000 – 30,000 lots
NZD/CAD
5,000 – 10,000 lots
My Experience with Low Liquidity Currency Pairs on Plus500
I chose to trade the EUR/TRY currency pair on Plus500, which is considered a low liquidity pair. I deposited $1,000 into my account and set a leverage of 1:100. My goal was to make 20% profit in a week.
Day 1: Market Analysis
I started by analyzing the EUR/TRY chart, looking for trends and patterns. I identified a strong downtrend, which led me to believe that the price would continue to fall. I set a sell order at 7.20, with a stop-loss at 7.35 and a take-profit at 7.05.
Day 2-3: Trade Management
As the price moved in my favor, I adjusted my stop-loss to 7.25. However, the price suddenly spiked to 7.40, triggering my stop-loss. I realized that I had underestimated the volatility of the market.
Day 4-5: Re-Entry
After re-evaluating the market, I decided to re-enter the trade at 7.30, with a tighter stop-loss at 7.35 and a take-profit at 7.10. This time, the price moved in my favor, and I closed the trade at 7.10, making a profit of 20 pips.
Challenges of Trading Low Liquidity Currency Pairs
Trading low liquidity currency pairs comes with its own set of challenges. Here are a few:
Wider Spreads: Low liquidity currency pairs often have wider spreads, which can eat into your profits.
Higher Volatility: Low liquidity currency pairs can be more volatile, making it challenging to predict price movements.
Lower Trading Volume: Lower trading volume can result in slower trade execution and higher slippage.
Tips for Trading Low Liquidity Currency Pairs on Plus500
Here are some tips to keep in mind when trading low liquidity currency pairs on Plus500:
Use Leverage Wisely: Leverage can be a double-edged sword. Make sure you understand the risks involved.
Set Realistic Goals: Don’t expect to make unrealistic profits. Set achievable goals and manage your expectations.
Monitor Market Conditions: Keep an eye on market news and events that can affect your trade.
Use Stop-Losses: Stop-losses can help limit your losses in case the trade doesn’t go in your favor.
Frequently Asked Questions
What are low liquidity currency pairs?
Low liquidity currency pairs are pairs that have a low trading volume and fewer market participants. These pairs often include exotic or emerging market currencies, such as the South African Rand (ZAR), Turkish Lira (TRY), or Mexican Peso (MXN), paired with major currencies like the US Dollar (USD) or Euro (EUR).
Why are low liquidity currency pairs traded on Plus500?
Plus500 offers a wide range of currency pairs, including low liquidity pairs, to provide traders with more investment opportunities. While these pairs may have lower trading volumes, they can still offer trading opportunities for those who are willing to take on higher risks.
How do I trade low liquidity currency pairs on Plus500?
Trading low liquidity currency pairs on Plus500 is similar to trading more liquid pairs. You can follow these steps:
Log in to your Plus500 account and navigate to the Forex section
Search for the low liquidity currency pair you want to trade (e.g., USD/ZAR or EUR/TRY)
Set your trade parameters, including the amount you want to trade and your stop-loss and take-profit levels
Click “Buy” or “Sell” to execute your trade
What are the risks of trading low liquidity currency pairs on Plus500?
Trading low liquidity currency pairs on Plus500 comes with higher risks due to:
Wider bid-ask spreads: The difference between the buy and sell prices may be wider, resulting in higher trading costs
Higher volatility: Prices can fluctuate rapidly, making it more challenging to exit trades at desired levels
Lower market participation: Fewer market participants can lead to lower trading volumes, making it more difficult to execute trades quickly
Slippage: Trades may be executed at prices that are different from the prices you intended, resulting in unexpected losses
How can I manage the risks of trading low liquidity currency pairs on Plus500?
To manage the risks of trading low liquidity currency pairs on Plus500, follow these best practices:
Set realistic expectations: Be prepared for wider bid-ask spreads and higher volatility
Use proper risk management: Set stop-loss and take-profit levels to limit potential losses and lock in profits
Monitor market conditions: Keep an eye on market news and events that may impact the currency pair you’re trading
Use leverage wisely: Avoid using high leverage, as it can amplify losses as well as profits
Are there any specific requirements for trading low liquidity currency pairs on Plus500?
Yes, Plus500 may have specific requirements for trading low liquidity currency pairs, such as:
Higher minimum trade sizes: To trade low liquidity pairs, you may need to trade larger amounts
Stricter margin requirements: You may need to maintain a higher margin balance to trade low liquidity pairs
Please note that these requirements may vary depending on your account type and the specific currency pair you’re trading. Always check the Plus500 website or consult with their customer support for the most up-to-date information.
