All the financial instruments, including currencies move based on certain behavioral patterns, which may differ from one to another. Currencies are always quoted in pairs, one currency value against another. Currency correlation happens when the price of two or more currency pairs moves in conjunction with one another.

Although currency market is the largest financial market in the world, it is relatively unfamiliar terrain for retail traders. Currency market is the most widely traded market in the world, with more than $4 trillion being bought and sold every single day. You can speculate on the future direction of currencies, taking either a long or short position depending on whether you think the currency’s value will go up or down.

The exotic currency pairs typically refer to the currency of emerging markets such as peripheral Europe, Latin America, Asia, and the Middle East. Exotics tend to be less liquid and more volatile than their counterparts in more developed countries. For this reason, these currencies are traded in lesser quantities or used purely to facilitate international trade.