What is Cross & Exotic Pairs?

Crosses are major-currency pairs without the US dollar (EUR/GBP); exotics pair a major with an emerging-market currency (USD/PKR).

A cross pair is a currency pair made of two major currencies that does not include the US dollar — EUR/GBP, EUR/JPY, GBP/JPY and AUD/NZD are common examples. Crosses trade with reasonable liquidity, though spreads are usually somewhat wider than the majors, and some of them, like GBP/JPY, are famous for fast, volatile movement that punishes hesitation. An exotic pair combines a major currency with a smaller or emerging-market currency, such as USD/TRY, USD/ZAR or USD/PKR, where one side of the quote is a thin, locally driven market.

Exotics deserve genuine caution. Their spreads can be ten to fifty times wider than EUR/USD, liquidity is thin, price can gap violently on local political or economic news, and swap costs are often severe. A stop loss that would be perfectly reasonable on a major can be swallowed by the spread alone on an exotic. Crosses can be traded well by experienced hands; exotics are best left alone until a trader is consistently profitable on majors — and often even then.