The currencies at their core are driven by interest rates, local economies and flow of funds in or out of that individual currency zone. There are a few basic differences between trading major crosses and crosses of other currencies also called exotic crosses. The liquidity in exotic currencies is certainly lower, which translates to wider spreads.
For example: while EUR/USD or USD/JPY may have spreads between bid and offer from choice (no spread) to one to two pips, traders should expect spreads in exotic currency crosses from three to 10 pips, depending on the time of the day, which is directly linked to liquidity and depends on the spreads the dealer offers. However, the major cross pairs like EUR/JPY are quite liquid.
That also means that the costs of the trade are much higher when one has to buy/sell with seven-pip spreads. Traders based in different time zones have to be cognizant of the liquidity in the markets and upcoming economic numbers in that currency zone and be prepared for significant volatility during that time.
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