Pairs matching a major currency with an emerging-market currency, such as USD/TRY or USD/ZAR; wide spreads and sharp moves.
Exotics have thin liquidity, spreads of several to dozens of pips, and high swap-rates. They can move violently on political news and central-bank intervention, and gaps over weekends are common.
Most retail traders are better served avoiding them until they have experience with the major-pairs.
Example: USD/TRY might carry a 30-pip spread and an overnight swap that costs or pays several dollars per lot per night, a cost that matters far more than on EUR/USD.
Original diagrams for the ideas on this page. Illustrative, not real market data.
The bid-ask spread. Buy orders sit below, sell orders above, and the gap between the best bid (50.01) and best ask (50.04) is the spread you pay to cross. Bar length shows the size resting at each price.
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