Canadian Dollar Futures: How to Day Trade Breakouts

The Canadian dollar stocks would be the derivatives commodity trading the underlying stock of the Canadian buck. Unlike the location marketplaces at which the amount quote relies on a single U.S. dollar, the Canadian dollar stocks are priced because being a value of 1 Canadian dollar into this U.S. buck. It’s just the reverse of this USDCAD area marketplace amounts. Canadian dollar stocks are section of their money markets with all the trades being traded in the CME market. The futures contract are standardized contracts and certainly will be deducted for bodily delivery of their money or deducted via money.

Hedgers and speculators alike may engage in trading the Canadian dollar stocks. For the afternoon trader, the very low margin demand along side good volumes helps to ensure traders may trade the Canadian dollar stocks with comparative ease.

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Canadian dollar futures daily volume (CME Group)

The average daily volume in the standard Canadian dollar futures is around 100,000 contracts making this a highly liquid futures product to trade.

There are many different strategies that one can employ to trade the Canadian dollar futures profitably. These can range from short term technical analysis based techniques or even making use of the fundamentals that determine the underlying trends in the marketplaces.

The CME Futures group offers the standard Canadian dollar futures which has the following specifications.

Ticker 6C
Contract Size 100,000 Canadian dollars
Trading Hours Sunday – Friday 6:00 p.m. – 5:00 p.m. (5:00 p.m. – 4:00 p.m. Chicago Time/CT) with a 60-minute break each day beginning at 5:00 p.m. (4:00 p.m. CT)
Tick Size $0.00005
Tick Value $5
Contract Months Twenty months in the March quarterly cycle (Mar, Jun, Sep, Dec)

The tick value was changed to $5 in the Canadian dollar futures after all July 2016. Prior to the changes, the standard Canadian futures contracts had a tick value of $10. Depending on the futures broker that you trade with, the intraday margin requirements for trading the Canadian dollar futures is on average about $500.00.

Factors that influence the Canadian dollar exchange rate

As with any exchange rate, the Canadian dollar is influenced by a variety of factors which broadly fall into either the economic factors or geo-political factors. Canada has a very stable political environment and due to its close proximity with the U.S. the economy is highly influenced by the U.S. economy.

The Canadian dollar is known as a commodity currency. This is because of the oil exports from Canada. Traders should know that the Canadian dollar is also influenced by oil amounts. Oil in Canada is primarily extracted from the tar sands. It is a more expensive way to extract oil compared to shale oil or even traditional drilling, used widely in the middle-east. However, the proximity to the United States makes it easy for Canada to extract oil and ship it via pipelines.

The chart underneath shows an overlay of the Canadian dollar futures and the WTI Crude oil amounts. The long term chart shows how the Canadian dollar and the oil amounts tend to follow the similarly trends.

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Canadian dollar stocks NYMEX WTI Crude Oil stocks

In the above graph, the blue line represents that the Canadian dollar stocks as the dark line represents the NYMEX WTI Crude petroleum amounts. The monthly graph demonstrates the way a Canadian money and Oil amounts go in tandem. For that reason, when investing in the Canadian dollar stocks, traders also will need to keep a look from the petroleum marketplaces that could bring short-term volatility into the money marketplaces. But, utilising the Oil marketplaces and analyzing how the trends may be an extra approach to verify the amount trends in the Canadian penny stocks marketplaces.

How to trade mistakes together with the Canadian dollar stocks

On an intraday basis, the Canadian dollar stocks is traded for speculative purposes for short-term gains. By having a mean day trading margin requirements of just $500 with a sign value of 5, traders are able to look towards earning decent profits in the Canadian dollar stocks marketplaces together with comparative ease. Below are a few of the manners traders are able to look in trading the hassles from the Canadian buck.

A break out procedure is largely employed by short-term intraday stocks traders. By properly positioning yourself, traders may plan a possible volatile break out at amounts as volatility grows. With superior money management, traders may limit the downside risks when investing in mistakes. Below are a few of the manners day traders may use the break out trading strategies to get Canadian dollar stocks.

Trend lineup break out method

The fad line break out method is quite simple which uses trendlines and uses volumes to ascertain the validity of this break out from the fashion . Trading over the short-term timeframe such as 15minutes or lower may provide prospective benefits in an incredibly small amount of time with limited risks.

In this technique, the before all else thing is to have a look at a 15-minute, or 10 or even 5-minute graph. Assessing the short-term trends, traders may join the tendency to consecutive highs or lows to storyline a rising or a falling trendline.

Traders then will need to find out the resistance and support ranges, which are available by taking a look at degrees where amount has turned into horizontal. Observing a break out of this service (with an increasing tendency line) or perhaps a break out of immunity (with a declining trendline ), traders may go long or short so.

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Canadian dollar futures trend line breakout

In the above chart after the trend line is plotted, the red horizontal ray shows the resistance level, which is where we place the stops. The black horizontal ray marks the support which will be the trigger to go short. You can see the strong bearish candlestick that broke the support and locked outside the trend line. Short positions are taken at this closing amount with stops near the resistance (red line) while targeting the low of the trend line. In the above example after a continuation, amount quickly reverses back to post a higher high, breaching the previous resistance level.

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Trend point break-out, putting a brand new trade

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The preceding graph indicates a brand new fashion line that’s plotted with the immunity amount currently transferred into the brand new high closure, whilst the brief entrance is changed upwards into the former immunity level that could turn into encourage. During this second occasion we can observe how short positions have been accepted following the sturdy bearish candlestick that shuts underneath the preceding service and additionally breaks the older tendency lineup. Price lasts lower and in the end reaches the planned shoot benefit stage.

This method might be further supported by employing volatility signs like Bollinger bands.

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Validating breakouts with Bollinger bands

The next chart above shows the Bollinger bands being added. In this example, the trend line is plotted to the declines in amounts. Support and resistance levels are plotted on the chart and a long position is taken after amount dips to the lower Bollinger band and then closes above the previous support low and also breaks out from the trend line. A long position here eventually leads to amount reaching the amount target set at the high of the trend line.

The trend line breakout method can be a profitable approach to day trading the Canadian dollar futures. The potential to make benefits are big while the risks are limited. While losses are part and parcel of trading breakouts in general the trend line method can be a reliable way to capture the short term benefits. Of course, the key to trading the Canadian dollar futures trend line breakout method is to keep an eye on the fundamentals as well which can offer additional confirmation and add validity to the trading signals.

Trading economic events

Economic events offer a simple approach to day trading the futures marketplaces. On most weeks, the economic calendar is usually packed with various events. The before all else two weeks of the month are usually busy and the pace of economic releases starts to slowdown towards the third and final weeks of the months. Traders can look for isolated economic events to day trade the Canadian dollar futures marketplaces.

In the chart underneath, the blue horizontal line shows the timeline for the Bank of Canada monetary policy statement. Prior to this event, you can see the previous high and low that was formed. Simply plot a horizontal level prior to the news release and trade the breakout accordingly. For the target amount, calculate the pip difference in the middle the high and low and project the similarly either to the upside or to the downside.

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Trading the financial occasions via migraines

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In the graph it is possible to view that amount dropped out to the upside after the BoC’s rate announcement. Long places are therefore taken in the top using a pending sequence and also the mark would be place to get 14 pips.

Another illustration can be viewed within the next graph underneath where we now plot the highs and lows before this Ivey PMI report release.

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Trading breakouts on Canadian dollar – News based volatility

In this example amount shows a period of consolidation after breaking out to the upside. However, over time amount eventually reaches the projected upside target.

The news based breakout offers a quick way to day trade the Canadian dollar futures marketplaces. However, traders need to be disciplined in picking out only the events which are in isolation. For example, there are economic reports that are released within a short time frame as shown in the economic calendar underneath.

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Trading Mistakes on Canadian buck – News established volatility

In the above case we’ve three individual releases, which were a lot better than anticipated. But, there are occasions when the financial reports might be mixed which increases plenty of noise as well as consolidation. It’s almost always much better to exclude such events and just concentrate on single events which permit one to manage every entire day trading rankings.

Day trading predicated on economical releases works due to the volatility which employs the news release. Traders are able to just take convenience of the placing themselves prior to these news events and trade that the hassles profitably.

The aforementioned two means for investing in the Canadian penny stocks are one of many manners traders may employ either technical analysis or fundamental analysis to day trade the futures marketplaces. With enough training, futures traders may also looking in developing their custom afternoon trading plans to the Canadian buck.

In end, day-trading that the Canadian buck can be quite a means to trade the money futures marketplaces to taking convenience of their short-term opportunities in the marketplaces. With the normal futures having enough liquiditydaily traders may turn to a few of many temporary daytrading strategies outlined within this essay to create consistent benefits with the years.

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