As they are highly unstable one should be mindful while trading in them and I also feel that controlling your risk through a trading plan that incorporates price stability and risk management guidelines is the key to successfully trading in volatile currency pairs.
The market already being volatile, little trading volume of exotic currency pairs makes it more difficult to predict the market price movement. Lesser liquidity also results in wider spreads.
Exotic currency pairs are highly volatile, with very little liquidity and widest spreads. Wide spreads increases the overall trading costs and makes the profits negligible. It is better to avoid them.
Trading exotic pairs has a high risk factor because the volatility of these pairs is extremely high and spreads of exotic pairs are very large, making it costly to trade them.
i have seen sometimes any kind of fundamental knowledge be useless after having good knowledge and experience.