USDSEK and USDNOK: why most scalpers stay away

[Fairman]

USDSEK and USDNOK: why most scalpers stay away

Every now and then someone asks about scalping the Scandinavian currencies. USDSEK, USDNOK, EURSEK, EURNOK. They move, they trend sometimes, and they're less crowded than the majors.

The problem for scalpers is cost. Spreads on these pairs are much wider than on the majors, often many times wider in pips, and they widen further outside the core European hours. For a strategy with small targets, the spread can eat most of the expected move.

They also behave differently. NOK is linked to oil prices, so it reacts to oil moves in a way the majors don't. SEK is more sensitive to European growth and risk sentiment. Both can have sharp moves on local central bank decisions and data that most people don't track.

Liquidity is concentrated in European hours. Trading them in Asia is mostly paying wide spreads for thin, erratic price action.

That said, if you trade longer holding times, with targets that make the spread a small part of the move, they can be interesting. Some swing traders like EURNOK for oil-related ideas.

For pure scalping, I'd only look at them if your broker offers unusually tight spreads on them and you have a specific reason to trade them, not just because they move a lot.

[Fairman]

The way these pairs are quoted catches some people out. USDSEK and USDNOK trade around the 9 to 11 area, so a pip is worth much less than on EURUSD for the same lot size. That means a wide spread in pips might not be as bad in money terms as it looks, but the moves in pips are also bigger. The fair comparison is spread as a fraction of the typical range you'd trade, not spread in pips. On most brokers that comparison still comes out against them for scalping.

[Fairman]

If you're curious, a cheap way to learn them is to watch EURNOK and EURSEK for a few weeks without trading, alongside oil and the European stock indices. You'll get a feel for what moves them and when they're active. Then check the spread at the hours you'd trade. A lot of people find the pairs interesting to watch but not worth the cost to trade on short timeframes. Others find a niche where their style fits. Either way, watching first costs nothing. Just be honest about whether the pair actually fits your targets once costs are counted.

[FXS Prop Desk]

Spreads on USDSEK and USDNOK can be several times wider than on the majors, which makes small targets impossible.

For those who want to trade them, longer holding times and bigger targets are needed. Oil prices also influence NOK strongly, so watching crude can help explain moves in USDNOK that look strange on the chart alone.

[Fairman]

The Scandinavian central banks have their own schedules and can surprise. The Riksbank and Norges Bank decisions move these pairs a lot, and their communication styles differ from the Fed or ECB. Norway's currency is also tied to oil prices, so a big oil move can push USDNOK even without any Norwegian news. If you ever do trade these pairs, having the oil chart and the central bank calendars for both countries open is important. Otherwise moves can seem random when they're actually following something you weren't watching. Both banks publish their meeting dates well in advance.

[Shadow Trader]

Spreads on USDNOK might be 15 to 40 times wider than on EURUSD, and the quotes move in jumps rather than smoothly. A single decent-sized order can push the price several pips.

That has two implications. First, the cost of entering and exiting is heavy, so a scalp needs a much bigger move to be worth anything. Second, the price can overshoot and come back, because the move was driven by one order rather than by a shift in sentiment.

Order flow on thin pairs is lumpy. Quiet minutes with nothing, then a flurry. Reading the tape on these pairs is more like watching a small stock than a currency majors chart.

Oil is the major driver for NOK, and it often leads. A scalper looking at USDNOK without watching crude is missing the lead indicator.

Session timing matters even more. Outside European hours, the spread can be double or triple, and the quotes can sit still for many seconds.

For most scalpers, thin pairs are a cost problem dressed up as an opportunity. The few who make money there tend to treat it as a slower, selective game.

Is there a real edge on exotic or Scandinavian pairs, or does the spread always eat it?

[Fairman]

Swap rates on these pairs can be surprisingly large, depending on the interest rate gap with the dollar. Holding USDSEK or USDNOK overnight might cost or earn more than on major pairs, and the broker's markup can make both sides negative. For scalpers it doesn't matter much, but anyone thinking of holding a position for days should check the swap first. Combined with wide spreads, the cost of holding can eat into any profit faster than people expect. That's one more reason these pairs rarely suit short term traders. The swap figure is in the symbol specification on most platforms.