Trading Exotics

For a long time, I've stuck to the majors. Recently, I've been looking into trading the more exotic pairs. Sure, some have higher spreads, but there's also a lot of predictable movement. It seems that the lack of attention provides us ample opportunity to profit, or at least hedge our risk.

For my first trick, see the graph of the USD/CNY (the Chinese Yuan). The Yuan has been killing the dollar for the past year or so. Practically any entry short over the past year would have made significant profits.

Has anyone had a positive experience trading exotics? What pairs specifically?

I hate unpopular pairs, and here's why:

- Low liquidity, and bad execution/availability when you move to higher volumes , also not offered by all brokers (depending on the pair).

- UNPREDICTABLE (or at least statistically-bizarre) price action due to the fact that small relative number of participants means that those few bastards can kick it any way they like with no proper reaction from the market. For example, you will get some extremely unlikely prolonged periods of price falling or rising. The push-and-pull game of the market does not work the way you expect it to, and governmental intervention can be fast and deadly(without investment houses fighting it).

- Xenophobia: if you build your models and your understanding on a particular market, moving into a lesser known one will involve a learning curve, research..etc. Majors will behave differently from one another but will still have enough in common to allow discretionary reasoning without having to go for a meditation session in between charts to clear your mind.

And honestly, we're in a risky, volatile, speculative market. Things go "wrong" all the time even with our developed systems and our experience in our own home court. I have enough headaches from the territory I know, why in Gates' name would I go after the blue?

The answer may ironically be in my "frustration with their price action" point above. You can argue that they are "bizarre" because they are in fact simpler to trade, and offer more stable investments. Either way, looking forward to hearing from someone who has actually traded large amounts of them on some exchange.

tried them,...and aint touching anything that isnt 24/5...i hate gaps...u know overnight can happen a disastor, and ur broker refused to fill u...