Range Trade Forex with Non-U.S. Dollar Pairs

Summary: How do you decide which pair of currency is suitable for range trade? Find out in this article.


A range trade is actually known as a short-term consolidation which changes from time to time. A good way to make profit in range trade is to choose non U.S dollar pairs and focus at other type of currencies.

As all of us know, the trend in forex usually follows U.S dollars. Therefore, to avoid trend bias, choose a non U.S dollars pairs and work on the ranging forex trading strategy. If you can observe clearly on what have happened in the past 6 months, all pairs involving U.S dollars did not show a long lasting range trend and this has caused losses to most of the traders.

Most of the traders like to trade using EUR/USD pair and if you study the chart closely for its past performance, you realize that the chart is either moving upwards or downwards. Unlike non U.S dollars pairs, the chart usually stays within some values of pip range and the trading is more stable and volatile.

However, not all U.S dollars pairs show a non-volatile range in forex market. As a smart trader, it is good if you can observe the trend for each currency pair for a certain period of time by looking at the chart or study the interest rate differential.

So, how does interest rate differential affects the volatility of a currency pair? Interest rate differential is the difference of bank interest rate offered by the currency pair. For example, interest rate for Australia’s bank is 3.75% and Japan’s bank is offering 0.10% and the difference (3.65%) is called the interest rate differential. Observe also the historical data back in few years ago to determine if the currency pair is a volatile pair or not.

In conclusion, there are two considerations to take note while using ranging strategy to trade. First is to choose non U.S dollars pairs to avoid bias and second is choose pairs with low interest rate differential. Always study the chart and historical data wisely before deciding to trade.