To start with, Canada is considered one of the ten largest crude oil exporters in the world, and this makes its currency, Canadian dollar, very lucrative for Forex traders who like to speculate on the oil prices. This speculation appears to be very profitable, since the loonie (as the Canadian dollar is often called) is a classical commodity currency.
The essence – when the oil prices are rising, Canadian dollar strengthens respectively (against US dollar in particular), since price for oil is denominated in the greenback. Accordingly, forex trades prefer to go long for the US dollars and to go short for Canadian ones when the oil prices are falling. It must be mentioned that this strategy appears to be very beneficial for the Forex traders in the majority of cases.
Every Forex trader willing to make profit on the Canadian dollar should keep in mind that one of the key factors supporting the strength of the Canadian dollar is the closeness of the two major stable buyers of Canadian oil – the USA and Japan. What is more, Canada is said to have the second largest reserve of oil in world, which is important in the context of constant flourishing demand for this commodity that is most likely to continue in future. This results in the fact that Canada and Canadian dollar are ready to meet and satisfy the world demand for oil.
As far as Forex market analysis is concerned, when using technical charts in order to spot the correlation between the Canadian dollar performance in relation to the oil, it becomes obvious that this correlation is very tight. It means that if the Canadian oil takes the leading positions, its dollar’s value rises, too. Thus, oil movements turn out to be a reliable indicator which prompts a Forex trader whether to sell or to buy the Canadian dollars.
Another thing to remember is that one more way to speculate on the correlation between Canadian dollar and oil is exchange-traded funds concentrated on the Canadian currency.
However, the main conclusion is that relations between Canadian dollar and such commodity as crude oil which is Canada’s major export are very profitable for forex trading. In particular this refers to the USD/CAD currency pair. In addition, the price action of the oil indicates to the trading opportunities as far as Canadian dollar is concerned.
This guest post is written by Alexander Collins who is a founder of Forex company. Forexeasystems can offer every trader wide range of forex trading systems that work since 2007.
Are you someone who is well-acquainted when it comes to foreign exchange? Do you think that you already have the best tools at your disposal?
Are you a newbie who would like to learn the ropes of foreign exchange hoping that you can bear with it and maybe learn from it? Do you have your hopes up that earning in forex will be possible for you?
If you are any of those mentioned above, you have read the right article. This article will make you think about whether you are really utilizing all the things that are out there or if you have been left behind. First off, you have to know whether your technology is at par with international standards.
The top forex programs are being used by almost everyone nowadays, and so should you. There is no point competing with them when they have the best and you are still doing things manually. The top forex programs will instantly make the tasks easier because of its automatic updates and routine checkups. If you have this at your disposal, you can just sit back and relax while you are earning big money. Buying and selling will not be a problem because the program can give you an insight without doing anything until you approve it.
An optional action that you should do to ensure that your investments will earn is by hiring a virtual assistant that will update you about your stocks. The virtual assistant will be on the lookout while you are out doing more important things. You will get alerts on whether there have been changes in the market that are significant to you. When you reply, the assistant will then carry out the decisions you have made. Everything is done systematically, so there is no need for you to be stressed out about foreign exchange anymore.
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Foreign exchange is easy to learn, but the information needed to be adept at it takes years to be remembered. If you did not graduate with a degree in finance or economics, you may find it hard to understand the concepts and the applications of forex. As an overview, you have to know that foreign exchange determines how the US dollar and other currencies fare depending on their relative values. Basically, if the currency value is high, others will have to use more of their money in order to exchange for the same value.
That is the basic concept that all forex guides will tell you. Everything that happens in forex is based on that principle, so you should never forget that. Another concept is the matter of buying and selling of stocks. When you buy, you have to make sure that you are buying stocks at a favorable price that you think would benefit you later on. When you sell, you should be confident that it is the best that you have. Unless you are sure, you have to make sure that you hold your cards until the right time comes.
To understand the concepts of forex trading further, you have to read forex guides. These guides are divided into different topics, from the easiest and basics to the more complicated. If you are reading this, make sure that you do not move on from one guide to another without fully understanding it. In almost every concept in finance, you have to remember the backing concepts that have been previously discussed. If you have forgotten them, learning the new ones will be hard. It’s like multiplying without even remembering how to add. You have to learn the basics first before trying to learn the more complicated ones. After you have learned the basics by heart, you can move on to the others with confidence.
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