Table of the most volatile currency pairs on Forex 2021

Hello readers!

Today I’ll tell you what volatile shares are on the Moscow Exchange.

Stock volatility refers to price fluctuations over a certain period. During the day, indicators can show changes of several hundred percent. But in developed US markets, volatility does not exceed 20-30% in calm times.

If a share costs no more than one dollar, then fluctuations can only be tracked by the price value as a percentage. Which securities are the most volatile on the Moscow Exchange, why do you need to track this, let's figure it out.

The most volatile stocks on the MICEX

The volatility of securities directly depends on their liquidity. The slightest fluctuation in liquidity changes the amount in one direction or the other. Therefore, volatile shares of the Moscow Exchange are the Central Bank with a turnover of more than 10 million rubles. in a day.

The following companies are listed:

• Irkut - standard deviation 6.3%;
• En-Group - 4.1%;
• SAFMAR - 3.6%;
• RUSAL - 3.5%;
• Mechel - 2.9%;
• MegaFon - 2.7%;
• NPK UWC - 2.7%;
• Sberbank - 2.4% and others.

The standard deviation of the leading stock was 6.3% with a return of 0.9% per day. Such indicators give an average expected profit in a wide range from 7.2 to -5.4%.

How to calculate volatility

There is a special formula for calculating volatility. She looks like this:

B = W / P1/2,

Where:

• W – standard deviation of stock returns;
• P is the calculation period expressed in years.

To calculate volatility using this formula, you need to know the standard deviation of stock returns. Of course, you can calculate it yourself, but it is better to use ready-made solutions.

If I suddenly need to look at the volatility of a particular instrument, then I look at the multiplier value on screeners, for example, here: https://ru.tradingview.com/screener/.

Here you can see the dynamics of price changes for any period, beta and volatility value.

But, as I wrote above, you should not base your conclusions solely on the volatility value. This may be a dead end - instead of an actively traded stock, you may end up with a hard illiquid stock, the price dynamics of which will entirely depend on the actions of large investors.

Thus, stock volatility is the degree to which the price of an asset changes over time. More volatile stocks provide more chances to make money, but there are also more chances to lose money during active speculation. Less volatile stocks provide the opportunity to earn stable income, albeit less. When analyzing volatility, you need to compare it with other ratios, in particular liquidity, and draw conclusions based on all factors so as not to fall into the trap of false growth. Good luck, and may the money be with you!

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What is this book

• Title: The 100 Best Stocks to Buy in 2019 ;
• Authors: Peter Sander and Scott Bobo;
• Publisher: Adams Media;
• Publication date: December 18, 2018;
• Number of pages (paper version): 400;
• ISBN: 978-1-5072-0894-6;
• English language;
• Additionally: there is an electronic version of the book (for Kindle).

If the reader does not speak or speak English poorly or is not well versed in the US stock market. Then you should start with this book. It is in Russian, plus the material is presented there from simple to complex in an accessible form.

Advantages and disadvantages of volatile currency pairs

The lower the indicator, the lower the risk for the investor. If we trade very carefully and value our tiny deposit, it is better to choose currency combinations with a low indicator.

The disadvantage for novice traders is the large potential drawdown. It’s one thing if the price fluctuates between 20-30 pips, and another thing if it fluctuates 100 or more. To survive such fluctuations, you need a fat deposit.

The main advantage of highly volatile duos is the potential for greater rewards. The faster and more strongly the price changes, the more money you can squeeze out of the trend.

So, should you choose low-volatility or high-volatility currency combinations? The correct answer is a balance of both, depending on your trading style, goals, and risk tolerance.

Exxon Mobil Corp

• Dividend yield in 2021: 8.05%
• View company card

Exxon Mobil is one of the largest oil companies. It produces oil in Texas, New Mexico, North Dakota, Alaska, the Gulf of Mexico and shale gas in the states of West Virginia, Pennsylvania, Ohio, Louisiana and Texas.

He also actively participates in foreign projects and extracts minerals in Angola, Equatorial Guinea, Mozambique, Nigeria, Chad, Azerbaijan, Kazakhstan, Indonesia, Iraq, Malaysia, Qatar, Thailand and the UAE.

Blue Chip Index

From the table in the example above, a pool of shares with good liquidity is selected. In the future, they can be filtered using the blue chip index; its basket includes the largest companies on the Russian market. in the “ Calculation Base ” tab in the corresponding section on the MICEX website. If a company passes liquidity filter and is simultaneously included in the MOEX Blue Chips basket , it can be dealt with intraday.

Blue chip quotes are more suitable for making money. illogical on the chart ; they lend themselves better to technical analysis.

Charts of low-liquid assets are more difficult to analyze. For them, the norm is calm for several days or weeks, and then the appearance of a candle with a range 20-50 times larger than its neighbors. This is how the traces of large players appear: due to weak supply and demand, with a large volume of buying or selling, all liquidity is taken out and a large candle appears. It is impossible to predict the emergence of such a movement .

The relationship between liquidity and volatility

Some investors believe that liquidity and volatility are directly related: the more liquid a security is, the higher the volatility. In fact, there is a connection, but it is indirect.

Let me start with the fact that low liquidity and low volatility are indeed related. If a security has a low free-float ratio, this means that there is a limited number of buyers and sellers in the market and they will a priori conduct a small number of transactions.

If the liquidity of a security is high and the free-float ratio is high, then the volatility can be both high and low. It all depends on the above factors and, in general, on the interest in the security on the part of investors and speculators.

For example, the same Central Telegraph has liquidity at a fairly high level, but volatility is not very high: there are no signals for shares to rise, but there are no prerequisites for falls either. But Gazprom, Sberbank, Lukoil and other blue chips of the Russian market are fine with both liquidity and volatility.

On the other hand, if a stock has a low free-float, then one transaction with large capital can significantly move the quotes - and therefore the actual volatility will be high. For example, if you look at NEFAZ shares for the year, you can see that during the year the price fluctuated in a fairly narrow range from 84 to 92 rubles, but in early October there was a sharp increase in quotes with a small volume of transactions - just some large investor made a good purchase. As a result, we have a volatility of 25.58% per year.

Therefore, volatility analysis should not be approached blindly, but rather, the entire context should be analyzed.

How the directory selects American stocks

To view an enlarged scan of the page, click on the image. The yellow marks on the page are mine. I showed what you should first of all pay attention to in the profile of each issuer.

The publication's authors select American stocks for investment using several methods. Value investing in dividend stocks covers ⅔ of the selection. Therefore, the book often contains the phrase: “the size of dividends has increased in 10 of the last 10 years.” The remaining ⅓ are shares that are interesting from the point of view of the expected aggressive growth of quotes. That's why Amazon is listed among the top 100 stocks in the guide. But Amazon has never paid dividends to shareholders in its history. That is, people who profess a value approach do not invest in AMZN shares.

“If you are so smart, then why aren’t you rich?” the reader will naturally ask. To this, Peter Sander and Scott Bobo present their annual calculated return on a portfolio of the top 100 stocks relative to a benchmark. That is, the profitability of the S&P 500 index. And they still manage to beat the main American index almost every year!

Currency volatility during trading sessions

I will consider Asian, European and American markets.

In the Asian session

Anything that includes the Japanese Yen (JPY) and Australian Dollar (AUD) is priced higher here. Peak trading occurs in the morning (Moscow time). During the day and evening the price moves sluggishly. Historically, volatility peaks are disrupted by the GPB/JPY currency duo, often exceeding 300 pips. The average is 100-110. So it’s enough for both ordinary traders and pros.

In the European session

The most convenient trading time for traders from CIS countries. During this period of time, GBP/CHF is trading more actively, staying around 150 pips. Not prohibitive, but also beyond the eyes, especially for beginners.

In the American session

American trading provides many opportunities. For those who like thoughtful trading, GBP/CHF is suitable, with an average of 130 pips. USD/JPY is trading more actively and exceeds several hundred points.

How does the company make money?

This is a platform for high-frequency (high-speed) trading of stocks, options, bonds, etc. In fact, it is an intermediary between many brokers and their clients: transactions and information from the exchange pass through the company’s platform. Virtu, in fact, provides uninterrupted high-frequency trading by buying assets from some market participants and selling them to others.

According to the company's annual report, revenue is divided into the following segments:

1. Trading is making money on the difference between the buyer's price and the seller's price. In fact, Robinhood, widely known in narrow circles, makes money by selling information about customer orders to platforms like Virtu, so that transactions are carried out on said platforms - and so that said platforms like Virtu make money from this process.
2. Interest and dividend income. Since the company makes money through active transactions in the stock market, lends money to other participants for activities, buys and holds valuable assets, in the process it somehow receives passive income.
3. Commissions and technology services. These are fees from market participants for transactions on the Virtu platform and for the maintenance of transactions.
4. Other. This refers to the company's non-core income. These are mainly investments in other businesses.

The bulk of its revenue comes from the United States, but the company also has a significant presence in other countries.

Logos of some Virtu clients. Source: company presentation, slide 5

Volatility indicators

To assess risks and determine the most profitable moment to enter the market, the following indicators of the level of price volatility are used:

• ATR indicator.
  It shows the nearest highs and lows of an asset and is the most common.
• Bollinger chart.
  It graphically shows the range of changes. If the curves on the chart follow a narrow corridor for a long time, this indicates an imminent price jump up or down.
• CCI indicator.
  Using Japanese candlestick monitoring, this indicator makes it possible to understand the location of the optimal entry and exit points from the market.

We have presented here only the main, most common indicators. In addition to them, there are many other indicators that can be used to assess risks, both individually and collectively.

What is volatility

This is the property of an exchange asset or currency pair to change sharply in price. Market liquidity has a great influence on this property of the asset. For currency duos with low liquidity, the price is more volatile and immediately reacts to changes in supply/demand. High liquidity limits market volatility. There you can drive large volumes without causing strong fluctuations in price.

Factors influencing volatility

What does volatility primarily depend on:

1. Global and local political and economic factors. Tax policy, interest rate policy, and other administrative practices can make significant changes in the operation of the market.
2. Industry factors. For example, the increasing role of wind and solar energy reduces the demand for oil and weakens the national currencies of exporting countries. In turn, this leads to a jump in prices for all currency pairs that include them.

How to Use Volatility in Forex Trading

The indicator is often seen as a negative thing in the sense that it is a source of uncertainty and risk. However, it is precisely this that makes Forex trading attractive to traders.

The potential rewards of speculating in buoyant markets make investors wince, but are very motivating for traders. Volatility does not imply direction. This is simply the level of exchange rate fluctuations.

How to measure the volatility of currency pairs

Knowledge of general price fluctuations over time can be used in trading.

There are several indicators with which you can calculate the current parameters:

1. Moving averages. Probably the most frequently used indicator. They measure the average movement of the market over an arbitrary period of time. For example, by applying the 20 SMA settings to the chart, we will see the average price movement over the last 20 days. There are other types of moving averages, but for our purposes this one will suffice.
2. Bollinger Bands. Another useful tool. By standard, Bollinger Bands are two lines and 2 standard deviations. The readings are also read for the required period of time. When the bars shrink, this indicates a low reading. When they expand - about high things.

However, today it is not necessary to act in the old fashioned way. You can open any calculator, specify the period and get a visual printout in the form of lists, tables and graphs.

What can interfere

Sometimes it’s empty, sometimes it’s dense. The company's business is volatile, like the entire stock exchange, and therefore periods of rapid growth in profits can quickly be replaced by periods of stagnation and even losses. In fact, the company recently released guidance for the third quarter, and it turned out to be worse than expected, causing shares to fall. The third quarter on the stock exchange this year is not as volatile as before, so there are high risks that this quarter the company will not earn as much as we would like.

Revenue and profit for the last 12 months in billions of dollars, final margin as a percentage of revenue. Source: Macrotrends

Accounting. There's nothing terrible about a company's accounting, but it's worth remembering how volatile its earnings can be. Therefore, you need to be prepared for the fact that a bad, that is, calm for the stock exchange, quarter will lead to a drop in profits and, as a consequence, a cut in dividends.

Competitors. Virtu has competitors: Hudson River Trading, Jump Trading, RSJ Algorithmic Trading and many others. The main problem here seems to me to be a high probability that in order to maintain a high level of competitiveness, Virtu will spend money on acquiring these same competitors, which will give the company an additional advantage.