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How to Trade the USD/CAD Forex Pair
in this video we're going to take a look
at the US dollar Canadian dollar
exchange rate why is it so popular and
how to trade it hello I'm David Jones
from capital comm and this is the latest
in a series of videos where we look at
popular markets today we're going to
take a look at the dollar Canadian
dollar exchange right look at why it's
so popular go through some of the things
that drive this market and place a trade
with a stoploss so you can see how it
all works but first of all let's have a
quick catch-up with the typical
volatility so we'll go on our platform
then I'll come back and talk a bit more
about this currency pair let's take a
quick look at the chart for a dollar
Canadian dollar and then we'll have a
look at the currency pairing a bit more
depth come back to the chart and I'll
show you how to place a trade but I've
gone for a long term view here so this
is why it's popular with longer term and
shorter term traders so from the lows in
2018 around about 1:22 so if dollar was
buying one point two Canadian dollars
the market traded up to 136 so we saw a
fourteen hundred point move and move in
excess of ten percent that's US dollar
strength we're seeing there so that's
the really longer-term view let's take a
look at the short-term as well to see
why day traders like this market so here
we're looking at what just the last
couple of days and the dollar Canadian
dollar exchange rate has gone from about
130 140 that sort of area down as low as
130 65 so we've seen a move in excess of
70 points over sort of a less than 48
hour period so it's clearly short-term
volatility like this the traders really
want in markets what we're going to talk
about now some of the things that drive
the Canadian dollar how to trade it then
we're going to come back on the chart
and place a trade so dollar Canada is
the exchange rate of the US dollar to
the Canadian dollar so if in the markets
trading at one point three zero zero
zero it means that one US dollar buys
one point three Canadian dollars the
same as any other exchange rate I think
the Canadian dollar similar I suppose in
a way to the Australian dollar it's a
commodity
driven currency you know the economy in
Canada is is quite dependent on things
such as oil exports natural gas and even
lumber so if we see moves in these
markets they will have an impact usually
on the Canadian dollar exchange rate as
well like many other popular FX markets
it's widely traded seems a lot of volume
it's reckoned to be about the fifth or
sixth most popular traded currency pair
out there so sees lots of volume in the
market and what that means as traders is
that you have tight spreads so you are
the cost of buying and selling is
relatively low compared to some other
markets and usually means it's pretty
volatile you know we had a look on the
charts and even maybe over a couple of
quiet days we do still see some decent
moves so those are some of the reasons
why it's a popular market when it comes
to trading dollar canada you trade with
US trade contracts for difference CFDs
now that may well be a term you're
familiar with there are two main things
to be aware of when trading us using
CFDs you trade using leverage so in
effect you get more bang for your buck
traders have been using leverage for
decades and it's where a small sum of
money controls a much bigger financial
position so that's great when you're
right on market direction but of course
if you're magnifying your profits
you're also magnifying your losses so
it's more important than ever to use
risk controls such as stop losses and
we'll do that when we place a trade the
other benefit of trading using CFDs you
can trade markets in both directions so
you think the dollar is going to gain
against the Canadian dollar you'd buy
but if you thought actually the dollar
is going to fall and the Canadian dollar
is gonna rise you can sell short and
it's having this flexibility that's very
important when it comes to trading but
let's place a trade let's get back into
it go on the platform and place a trade
so you can see how it all works so we're
back on the show now I flipped this over
to an hourly chart so each of these
candles represents an hour's worth of
trading let's say I want to replace a
trade and I was going to speculate that
maybe we're gonna see the rate increase
you know we saw it drop a few days ago
down as low as 130 60 the market bounced
back about 80 points
we're back down at these level
so I'll take the view I think the
markets going to go out let's place the
trade I'll go to the top right up here
to buy click on buy and it opens up my
dealing ticket let's say I'm gonna put
my stop-loss below these lows so
somewhere the other side of 130 60 I'll
choose 130 30 so let's put close at a
loss I'll click on that and I'm gonna
choose 130 30 so my stops in what I can
do now if I want to I can reduce my size
at the moment I'm trading 12000 you can
see it here in the size at the top let's
say I don't take on that level of risk I
can trade a lot smaller you can see I
can trade from as low as a thousand
let's do that so let's set out for a
thousand US dollar Canadian dollar my
stop is in at one thirty thirty my risk
is tiny if I get stopped out I'd lose
two pounds sixty or something on this
trade we're ready to go we'll click on
Buy and you can see the confirmation has
come there the bottom left of the screen
now if I go to portfolio on the left
hand side I've got quite a few trades
running in here from before if we click
on portfolio so here you can see all the
trades that are running on my account
from other videos that we've done in
this series and and other market
commentary videos down here right at the
bottom this is the latest one adjusted
buying a thousand US dollar Canadian
dollar the trade was done at one thirty
seventy two point seven the markets
currently trading at about one thirty
seventy my stop-loss is in my margin
I've got 26 pounds 49 tied up and there
is my running loss at the moment so of
course the stop-loss will sit there I
can close the trade whenever the markets
open so if I changed my mind I can just
click on close now and close that trade
out but we'll leave it running and see
how it performs over the next few days
but but trading this market this
volatility it's as straightforward as
that to put these risk management
controls in place using stops of course
it's important to understand the trades
we do in these videos they aren't
financial advice they're just for
educational purposes only just to show
you the
Kanaks how trading on our platform works
that's it for this quick update on
dollar Canadian dollar to find out more
about the market and contrast a
difference just go to our website
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we'll wrap things up there so from me
David Jones and capital com good luck
with your trading
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