How can you profit from the USD/CAD weakness? Do you have to be the next market maker that calls the markets with the right timing? What if I told you that it was easy to make money with USD/CAD?
If you are trading the Forex markets, then you have to watch the financial news. There are many stories about the recent economic recession and the USD/CAD has declined substantially.
Every time the US dollar is weak against another currency, the Canadian dollar usually rises. This is good news for a savvy investor. Let's face it.
In addition to watching the economic news, you should also monitor the financial news on a regular basis. Sometimes, it can even be as important as the economic news. Sometimes, a currency can move based on speculation of an upcoming monetary policy.
As you can see, if the US dollar is at a low, the Canadian dollar will usually move higher. This is especially true when it is forecasted that the Canadian dollar will go up.
In fact, this is what happened last year when the Bank of Canada made its first policy decision after it lowered the bank rate to 1% from 4%. The Canadian dollar went up as the Canadian economy went down.
The implication of the Canada dollar increasing is that the Bank of Canada has created its first policy decision which supports its first rate cut and has also created the potential for an increase in the Canadian dollar. Do you see how important these indicators are?
Don't forget, even a dollar isn't that much when it comes to risk analysis. It might not seem like a lot of money, but for a trader, a few dollars really add up.
In other words, take some time to study each currency pair in the currency market. Compare their historical trends. You can also watch the financial news to see if there is any support for any currency pair.
As you continue your research, you might notice that some currency pairs do better than others. They might be trying to avoid the big US dollar loss or they might just be trying to close the gap between the currency pairs. This is a great opportunity for a forex trader to enter the market and take advantage of a great currency pair.
I recommend that you take out two or three times more risk for a currency pair that has a strong trend line. This makes it easier to profit in the currency markets.
Take some time to find a currency pair that has momentum and if you can get into an entry position right away, then you will make a killing. I hope this article has given you some ideas for you to make money with the USD/CAD weakness.