Signs you have what it takes to be a Forex trader

Signs You Have What It Takes To Be A Forex Trader

The Internet is full of investment-related information, of which most is aimed at teaching you how to trade the Forex market. While the information at-hand is vast and comprehensive, you can be falsely lured into thinking you can easily learn the skills required to be successful.

 

Some believe to be a successful trader you have to be born with certain qualities. The ability to analyse all aspects of markets, as well as a love of working with equations, is by all accounts seen as a given. However, this combination itself is simply not enough. There needs to be an excitement in seeing the markets move, an interest in hearing the speeches of the central banks, and to enjoy the satisfaction of making the right forex trading decisions.

 

An underlying skill you also need is the ability to separate emotions from your actions. There is no point throwing good money after bad money, this requires a strong discipline. Furthermore, a Forex trader also needs to be able to comprehend the significant amount of data quickly. If you were looking at a day trading market strategy, you would need to analyse everything related to the market conditions quickly to allow for an entry and exit of the market within a day.

 

The most successful traders have learnt to be fearless, as well as to handle fear properly. With the high degree of risk, your investment is open too, it requires a strong person to manage the fear of losing all invested capital. When you are confident in your carefully refined trading strategy, you will know how to handle failure without being too afraid of falling for the same mistakes.

 

A successful forex trader will also understand the key aspect of timing when it comes to placing trades. Your strategy will only allow you to make a trade when it is appropriate, even if this opportunity doesn’t open itself up for weeks. You should never open a trade unless all the information available to you compels you to do so.

 

Binge confident, along with being a leader, not a follower is also integral to success. Staying loyal to the defined strategy you have laid out and not following the crowd will ensure you will not be intimidated or have second thoughts before placing a trade. When other traders are all following each other’s behaviour, you would think there is an underlying factor. However, there are many scenarios where traders follow the pack and get burnt for their decision to do so.

 

Finally, a professional Forex trader will also never stop learning. There is no such thing as having “too much knowledge” on the subject of foreign currency exchange. When a vast amount of profits can depend on your overall level of knowledge, you should also continue to grow the level of understanding you have. With constantly changing markets, the most successful traders will embrace the new situation, analyse it, and finally address it.

 

Spreadbetting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.

 

Alexander Bowring is a London based writer and a Southampton Solent University Screenwriting graduate. He has worked alongside TV personality and Telegraph feature writer Alison Cork, whilst also having produced content for ITV, This Morning, Canvas8, Who’s Jack, Alison at Home, and Bonallack & Bishop Solicitors. Alexander also has a keen interest in investments.

How Forex Brokers Make Money

How Forex Brokers Make Money

The forex market (foreign exchange market) is where traders buy and sell a variety of currencies depending on whether they think such rise and fall in value. It is considered to be one of the highest-risk markets, yet still, sees over $5 trillion traded daily. To make a trade, you have to go from an intermediary forex broker to execute the trade. Even if the trade makes money, or loses money, the broker still profits on commissions and fees. Understanding in what areas forex brokers can make money may help you find the best broker for your needs.

 

The Role

 

A forex broker receives orders to buy or sell currencies and then executes such orders in real time. Typically operating on the OTC (over the counter) market. This market does not have the same regulations placed upon it as other financial exchanges, and the broker may not be bound by the rules regarding other securities transactions. With no centralised clearing mechanism, the risk is placed upon you if your counterparty defaults. Remember to investigate and conduct your due diligence on the counterparty before you enter into any agreements.

 

The Fees

 

In return for executing orders, a forex broker will want to be paid a commission for each trade or spread. This is where they make their money. A spread is a difference between the asking price and the bid price of a trade. The bid price is what amount you receive for selling a currency, whereas the asking price is the amount you pay for a currency. This difference between the two is referred to as the spread. A broker could choose to charge a commission on the order as well as a spread on a trade. If you see a broker offering a commission free trade, they will probably have a large spread to make up the difference.

 

The Spread

 

The spread itself can be fixed or variable. If it’s variable, the amount will vary depending on the market, for example, a change in interest rates affecting the major market could have a knock-on effect on the spread. In some cases, it may be advantageous to you and to others unfavourable. If the market becomes volatile, it may result in a much higher price than you expect. Be careful and pay close attention to a forex prices, as they can charge a different spread for buying and selling the same currency. Overall though, a well-capitalised broker who works with a number of large traders generally has competitive prices. What this means is that for traders it pays to shop around in order to get the best rates.

 

The Risks

 

It is possible to make margin trades through depositing a small amount. However, this introduces a lot of risks. In 2015, the Swiss National Bank no longer supported the euro, resulting in the Swiss franc appreciating significantly. Traders who did not foresee this event were not able to meet margin requires and lost a lot of money and a few even went bankrupt.

 

Spreadbetting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.

 

Alexander Bowring is a London based writer and a Southampton Solent University Screenwriting graduate. He has worked alongside TV personality and Telegraph feature writer Alison Cork, whilst also having produced content for ITV, This Morning, Canvas8, Who’s Jack, Alison at Home, and Bonallack & Bishop Solicitors. Alexander also has a keen interest in investments.

how to spot a forex trader

How To Spot A Forex Trader

When it comes to Forex traders you will find that they come in all different shapes and sizes. Across the diverse nature of our world, we have both men and women, from small to tall, all from a range of different cultures and traditions. You could be trading from the sandy white beaches in Thailand in your swimming trunks, or from a shoebox apartment in the heart of Paris. Wherever it may be, we believe there are several signs those giveaways whether someone is a trader, no matter if they are trying to keep it a secret.

 

We pondered on this thought for a bit, and considered what traders in their own countries share in common? It can be hard to determine, however, we thought it would be a bit of fun to make some spirited observations about what may define you as a trader. The following is a tongue-in-cheek look at the types of Forex traders you are likely to find around the globe.

 

The New York Trader

 

  • Upon their bookshelf is a copy of “Wall Street”; every trader will ask themselves at least once within their lifetime “What would Gordon Gekko do?”
  • After trading all night at the computer with unusual currencies, the tired baggy eyes are a giveaway.
  • Plenty of screens with plenty of trading screens. Everybody knows the more you have the more successful you are.
  • A bitten into stress ball, as sometimes you get a little too stressed for only a squeeze

 

The Tokyo Trader

 

  • “Candlesticks”, after analysing so much information those pupils have formed into candlesticks.
  • In the corner an old school Nintendo, covered in the dust of course because what trader has that free time to relax?
  • The embodied twitch in your fingers after countless painful trades.
  • Your table has marks from your fingertips tapping from frustration, waiting for the right market move.
  • The organisation being key, your calculator, strategy and trading history are all perfectly placed.

 

The London Trader

 

  • The constant pacing shows the worn carpet.
  • With so much stress about the loss of pips, a cardio defibrillator is upon the wall.
  • Your forehead is wrinkled with plenty of stress lines.
  • Various browser tabs open with a variety of media platforms, Twitter, Facebook, and forums are all present.
  • A nice strong cup of tea, of course, the drink the nation was built on.

 

The Sydney Trader

 

  • Suffering from the trader’s wrist, from all the clicking of course.
  • A forever overflowing swear jar.
  • The Carry Trading book on the desk, instructing you on about the balance of trading and having a life.
  • An emergency stash of beer, just in case the time is right.
  • An office outside, to trade and take in the sun simultaneously.

 

As you can see Forex traders come in a variety of different forms, so the big question is, what type of trader are you?

 

Spreadbetting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.

 

Alexander Bowring is a London based writer and a Southampton Solent University Screenwriting graduate. He has worked alongside TV personality and Telegraph feature writer Alison Cork, whilst also having produced content for ITV, This Morning, Canvas8, Who’s Jack, Alison at Home, and Bonallack & Bishop Solicitors. Alexander also has a keen interest in investments.

 

a guide to trading USD EUR

A Guide To Trading USD/EUR

While most world currencies can be traded in one form or another, one of the most common currency pairs to trade is undoubtedly the USD/EUR combo. It shouldn’t be so surprising as to why this is – these currencies collectively represent nearly half of the global economy, with over £20 trillion of economic output between the two. Furthermore, this pair has a tight spread and a wealth of data and information available on how to properly trade it, making it an attractive option for new traders. This article will give you a few key pointers that should help you trade this common, but poorly understood, currency pairing.

 

Key movement triggers

 

One of the most fundamental aspects of currency trading is known as movement triggers. These refer to any events that directly result in the movement of the currency’s value in either direction. Brexit is a particularly extreme example of a movement trigger. These are the reason for why the interest rates between the USD and the EUR vary. The actions of the United States Federal Reserve on the USD are one of the biggest driving factors on the value of the currency – the FED weakening the dollar can lower the gap between the two, while economic strength in the US will have the opposite effect.

 

Notable economic news

 

Of course, the state of the EU and US economies will also have a substantial impact on the performance of the USD/EUR. For example, in 2008 during the banking crisis the USD’s value plummeted, and the result was that for a brief time the EUR was worth about 1.60 USDs, a gap that has since narrowed substantially. For the EUR, the performance of its largest economies (France, Italy, Spain and Germany) will have a considerable impact on the performance of the currency as a whole. Always keep yourself notified of what’s happening in both of these economies, and in the case of the EU remember that even small member countries can have a large impact on the overall value of the EUR.

 

Stock market impact

 

As most will already know, the stock market is completely independent of the forex market, but that doesn’t mean that it doesn’t have an influence on currency values. Generally, rising stock prices correlate to healthy economic growth, which in turn strengthen the currency. The reverse is true as well. In addition, a poorly performing stock market can incentivise people to invest in something other than shares, including currencies – this can also affect the spread of the USD/EUR currency pair. While the stock market doesn’t influence currency values, the same factors that drive stock prices also influence currency values to some degree.

 

 

Cross-continent currency pairing

 

The USD/EUR currency pairing is perhaps the most underrated in the world – a little surprise considering how large the economies that use these currencies are. But as popular as they are, that doesn’t mean that you are guaranteed any form of success. Always do your research before committing money to any kind of trade – if you keep an eye on all of the economic and political changes going on in the United States and the European Union then you will be well positioned to turn a profit.

 

Spreadbetting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.

 

Alexander Bowring is a London based writer and a Southampton Solent University Screenwriting graduate. He has worked alongside TV personality and Telegraph feature writer Alison Cork, whilst also having produced content for ITV, This Morning, Canvas8, Who’s Jack, Alison at Home, and Bonallack & Bishop Solicitors. Alexander also has a keen interest in investments.

 

forex trading signal

What Is Forex Trading Signal?

If you are becoming intrigued by the subject of Forex trading then you will naturally be trying to learn as much as you can about the subject, and in the course of doing this, you might well have come across references to something described as a Forex trading signal. If you have not yet gone into the subject in depth yourself (and you should certainly do so before you commence making use of this tool, or indeed before you start forex trading in general) then here are a few pointers that begin to answer the question posed in the title of this article. The first point to note is that a Forex Trading Signal is simply a suggestion to enter trading on a specific pair of currencies at a specific time and also at a specific price. These useful signals will arrive in a manner of ways, all immediate and electronic. Your signal might be tweeted, e-mailed, posted on a website or arrive via SMS or RMS. With that simple statement we have given the bare bones answer to our question but of course, there are other matters to consider.

One is the source of origin of the forex trading signal that you have received. It might have been created by a person, who will be a forex analyst, or it might have been generated artificially by a forex computer programme that exists as part of a forex trading signal service.  Some of the signals that you can receive are free, while others will definitely have to be paid for and will come to you as part of a service which supplies the Forex trading signal. This signal might be from a single provider, or be from a service that generates the information from multiple systems.

If, as part of your exploration of the subject you decide to pay for a forex trading signal service, then you might be wondering exactly what you will get. This is a matter which the service provider will outline and to which you should pay attention. Will the forex trading signal give exact or approximate figures for the time of your entrance, your exit and also specify when the stop loss arrangement comes into effect? It is important you know this. Also, pay close attention to the other services provided and learn how to appreciate the analysis and trading history behind the signal. Also be prepared to make use of such services as coaching, the provision of educative matter on the subject, comments and account management and definitely be on the look-out for offers of trial periods.

It will also behove you to look into the systems which are used to generate the forex trading signal that is presented to you. Learn to differentiate between a forex trading signal that is generated by technical analysis (this is the majority in practice, and allows your provider to supply a wider range of trading options) and those generated by fundamental analysis or price action.

Spread betting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.

Forex trading guide for GBP/KWD

Forex Trading Guide For GBP/KWD

Pretty much everybody knows about currency pairs like the USD/GBP – these are the popular Forex trades that nearly every currency trader dabbles in. But just because it’s popular doesn’t mean that it’s the best, and some of the more underrated currency pairs can actually provide quite a bit of bang for your buck. The GBP/KWD currency pair is a fantastic example.

 

Trading this currency pair makes complete sense – after all, the two economies are closely linked together, with a substantial portion of trade flowing between the two countries. This particular trade is known for its stability and predictability, which enables traders to generate consistent returns on what is an often-underrated pair. That said, understanding the fundamentals of this currency pair is an important part of being able to take advantage of what it has to offer, and this guide aims to inform you of all the most important points you need to know when trading the GBP/KWD.

 

As simple as this concept seems, it’s often misunderstood by many newer traders. All currency pairs have a seasonal element to their performance – this is largely tied to the nature of the economies that these currencies depend upon. While you can’t be an expert on every economy, you can look up several decades of historical data relating to these currencies, which will give you a sense of what the long-term trends look like for pairs such as the GBP/KWD.

 

In many cases, GBP/KWD price dips in March and May are not uncommon, while for the pair to peak in the fall is also, once again, not uncommon. This doesn’t always exactly hold, but it is largely true for most currency pairs, GBP/KWD included. All forex trades have historical charts that you can access; giving you exact rates of change that will help you predict the general trend of a currency in the near-term. These aren’t just for veteran traders – anybody can access them entirely for free. All currency pairs have their own unique seasonal trends, so never fail to do your research before you commit to making a trade

 

You might have heard some people refer to forex scalping as a form of cheating. It isn’t – but what it happens to be is a very effective way to reduce your overall losses while maximising your overall gains if used correctly. Watching the small price movements of the GBP/KWD throughout the course of a day will position you to make the greatest profit. If you want to take advantage of this, keep three Exponential Moving Average charts near you – this will allow you to fully view every possible forex trade that you can make as well as view relevant technical information for each potential trade. Many of the most profitable traders utilise this technique, and you should too.

 

Don’t hesitate to take advantage of the GBP/KWD currency pair. Its relative anonymity will soon disappear as more traders become aware of how lucrative it can be, and knowing how to trade it effectively can net you some serious profits over the long term. This guide will provide you with all of the most important facts and tips, but ultimately you are responsible for arming yourself with the knowledge that you need to succeed when trading GBP/KWD.

 

Spreadbetting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.

 

Alexander Bowring is a London based writer and a Southampton Solent University Screenwriting graduate. He has worked alongside TV personality and Telegraph feature writer Alison Cork, whilst also having produced content for ITV, This Morning, Canvas8, Who’s Jack, Alison at Home, and Bonallack & Bishop Solicitors. Alexander also has a keen interest in investments.

Post-election rumblings surrounding USD/CAD

Post-Election Rumblings Surrounding USD/CAD

One of the casualties of Donald Trump being elected as the 45th United States president has been the Canadian Dollar, but will this trend continue? While we wait to find out, we can enjoy the gains on USD/CAD, with the currency pair reaching the kind of levels not seen since February 2016.

 

There are three good reasons that this decline has happened, and all three are related in some way to Donald Trump and his successful presidential campaign.

 

Dollar strength

Trump has announced some bold plans to cut taxes and increase spending on just about everything. His plans mean that there will be more borrowing from bond markets and higher interest rates and inflation. In other words, everything is supporting the US dollar. He could theoretically pass all of these plans through Congress, as the Republicans currently control it. In reality, however, these Republicans are against increasing debt. Even so, the markets are taking Trump seriously at least. The Canadian dollar isn’t bucking this particular trend, with that having an effect on the USD/CAD.

 

Trade deal confusion

One of the vows Trump made was that he would revamp trade negotiations, in particular, the NAFTA agreement held between the US, Canada, and Mexico. Canada (along with the USD/CAD) is reliant on trading with their southern neighbours and exporting to them. Uncertainty surrounding trade relations could hurt the Canadian economy across the parallel 49th. This damage could happen even if the change itself doesn’t, and even though most of the anger is directed not towards Canada, but towards Mexico.

 

Oil price instability

The price of crude oil has gone down. Part of this is because of reasons relating to Trump. A stronger dollar will usually bring reduced oil prices along with it, but there’s more to the story than just this. Iran recently announced that they have two new oil fields that are producing oil, but it also looks like OPEC is no closer to putting together a real agreement for its regulation either, which is creating problems, as the Canadian dollar is also weakened by reduced oil prices.

 

Currency volatility

By the end of November, the USD/CAD was trading at 1.3567, which is the highest that it’s been since February. The next level the currency pair can reach is 1.36535, which would be a swing low from early February. The record is currently 1.40 and it worked well as resistance in the tail end of 2015, meaning that it is also a strong line. If it were to go up to 1.4325 this would be a significant step on the road towards 1.47, which does seem somewhat distant.

 

There really is no other way to address the situation, as the USD/CAD is bracing itself for a rocky time in a Trump run world. While the post-election result gains are apparent, it’s pretty clear that such does not tell the whole story of what may very well be on the horizon.

 

Spreadbetting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.

 

Alexander Bowring is a London based writer and a Southampton Solent University Screenwriting graduate. He has worked alongside TV personality and Telegraph feature writer Alison Cork, whilst also having produced content for ITV, This Morning, Canvas8, Who’s Jack, Alison at Home, and Bonallack & Bishop Solicitors. Alexander also has a keen interest in investments.

USD/JPY poses interesting questions following Trump win

USD/JPY poses interesting questions following Trump win

Performance charts seldom lie, with the USD specific option showing you that the plunge in the dollar that was expected to arrive following the victory of Donald Trump did actually happen. The dollar really came back to life after the outcome of the election was, but the dip that occurred is pretty much clear to see. The improvement is because Trump is expected to spend more and increase inflation. The unpredictability of Trump was expected to lead to the stocks and the dollar overreacting and plummeting in the event he won, but the market being on such an upswing following his victory is about as surprising as the victory itself. All the polls were in the favour of Clinton after all.

 

The sentiment was magnified for the USD/JPY because the moves of the dollar were intensified thanks to strong moves by the yen. During Election Day, as it became more apparent that Trump had a chance of winning, so the dollar did indeed start to plunge. As was also expected the perception of market risk lead to people investing in, and boosting, the safe-haven of the Japanese yen. This drop in the dollar and rise in the yen led to the USD/JPY rate plummeting all the way to 101.00 before it eventually bounced back.

 

By the time trading opened on the day following the election, there was a reversal in this overreaction and the dollar bounced back and the yen was put under pressure by the appetite for risk following Trump’s win. This led to USD/JPY surging above its 200-day moving average and above major resistance to settling at around 105.50. The dollar was further strengthened and the yen was further weakened just 24 hours later, pushing the USD/JPY even further to the point that it broke out above the key downtrend line that went all the way back to February 2016.

 

It was expected that the market would be this bullish if Clinton won, but it looks like this outcome was the case with a Trump victory as well. The strength of the dollar was also further enhanced because there was less post-election volatility than usual. It’s also expected that the Federal Reserve are on the verge of raising interest rates. St. Louis Fed President James Bullard said that he foresees a rate hike, although the actual rate will still be pretty low for years to come. With the dollar continuing to gain strength leading to the mid-December Fed meeting, as well as the continuation of optimism in the market, it’s expected that USD/JPY will continue to rise.

 

The next resistance targets to be broken are the 108.00 and the 111.00 levels. It’s not known if it can reach those highs, but the markets will give it their best shot. Right now all eyes are on the next meeting of the Fed and President-Elect Donald Trump. Given the way that he’s already restored the markets, perhaps some people will be a little less apprehensive about the billionaire sitting in the oval office.

 

Spreadbetting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.

 

Alexander Bowring is a London based writer and a Southampton Solent University Screenwriting graduate. He has worked alongside TV personality and Telegraph feature writer Alison Cork, whilst also having produced content for ITV, This Morning, Canvas8, Who’s Jack, Alison at Home, and Bonallack & Bishop Solicitors. Alexander also has a keen interest in investments.

tale of trading the GBP/NZD

Telling A Tale Of Trading The GBP/NZD

Many currency pairings involving the GBP are quite popular with traders around the world, but some combinations are less popular than others. In spite of its stability and spread the GBP/NZD currency pair remains relatively undiscovered when compared to others like the GBP/USD and the GBP/EUR. I decided to take a look at the rhythm of this currency over a period of several weeks, and I have come to the conclusion that this pair represents one of the best possible opportunities to earn great returns. I’ll outline some of the bigger points that I think are relevant to those looking to trade the GBP/NZD.

Like most currency traders, much of my portfolio was concentrated on the GBP/USD and the GBP/EUR currency pair. While these are relatively steady pairs, they’re very commonly traded and there is little new ground to tread here. Most of my positions on these pairs yielded middling returns at best, but after refining my approach I managed to obtain positive returns nine straight months in a row, with my total monthly earnings exceeding £1,000 from a much smaller initial fund.

While this seems rather hard to believe for a lot of traders, this wasn’t quite as hard as some people made it seem, especially since people regard less-traded currency pairs as being too much of a risk. Keeping my trades firmly rooted in the facts, coming out ahead didn’t prove to be too difficult a task. And with my initial success came a determination and drive to do better.

My streak with the GBP/NZD occurred between October and November 2015, which is one of the better times to trade currencies. It’s understandable to be sceptical of my claim, but if you stick to your guns and play your hand smart, you can make it happen again and again. Don’t expect it to be a regular thing, but it will never happen if you don’t try.

I don’t want to give the impression that this is was an easy profit to obtain – I had an earlier losing streak that lasted for several days in a row and cost me several hundred pounds. In spite of my feelings of dejection I pressed on, and after re-assessing my strategy I managed to turn around my losses, even managing a £400 gain in 24 hours. That gain came off of just a £75 initial investment, so it was quite a tidy return. It’s easy to want to give up when things get rough, but even the best traders have rough patches. After that turbulent period, the GBP/NZD is now one of my most consistently positive investments.

That’s my own story surrounding the GBP/NZD currency pair – hopefully, it gives you some insight as to what goes on in a trader’s mind when they commit to something new. Betting on a less well-known currency pair can be a scary thing, but with time and practice, you can make it a very profitable venture. Just make sure you’ve got the funds and the patience to make it work!

Spreadbetting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.

 

Alexander Bowring is a London based writer and a Southampton Solent University Screenwriting graduate. He has worked alongside TV personality and Telegraph feature writer Alison Cork, whilst also having produced content for ITV, This Morning, Canvas8, Who’s Jack, Alison at Home, and Bonallack & Bishop Solicitors. Alexander also has a keen interest in investments.

GBP CAD explained

The Underlying Factors Of GBP/CAD Explained

A lot of currency trades are based upon the USD, but this isn’t always the case. While the health of the United States economy does have a considerable impact upon the rest of the world, it does not single-handedly influence currency values elsewhere. A common non-USD trade is between that of the GBP/CAD. These two economic powerhouses both boast outputs exceeding a trillion pounds, but the internals of these economies varies quite a bit.

In Canada’s case, the price of oil has quite a noticeable impact on the value of the CAD. The oil sand boom has only increased the share of oil production in Canada’s general economy and coupled with its dependence on the United States it is quite prone to sudden upward or downward changes in the status of its currency. Indeed, about 10% of Canada’s economy consists solely of oil extraction, and 97% of Canada’s extracted and refined oil goes to the United States, as well as a considerable portion of its manufactured goods. If you are going to trade the GBP/CAD, keep an especially close eye on the price of oil as well as the health of Canada’s trade sector with the United States.

For Great Britain, its trade with the EU constitutes the bulk of its economic and financial fortune. A substantial portion of its trade and foreign reserves stems from trade with other countries in Europe, given that its still-current membership in the EU affords it an advantage relative to trading with non-EU countries. Any threat or change to this dynamic can have a considerable impact on the value of the GBP/CAD (to say nothing of its value relative to all other currencies).

Indeed, the recent Brexit vote has caused a double-digit drop in the GBP’s value, a decline that it has yet to recover from. Because the financial sector is what Great Britain relies upon more, and being that a substantial degree of this business is done with the mainland, leaving the EU threatens to jeopardise this dynamic. While the Brexit does not suggest a complete cessation of business with Europe, the logistical hurdles introduced by the vote could reduce its level. Much like how the passage of NAFTA resulted in a significant increase in trade between the three North American countries, leaving the EU could have considerably negative effects on Great Britain’s economy in the future, along with being detrimental to the GBP/CAD currency pair.

Naturally, the above factors aren’t the only things to consider. But in the case of the GBP/CAD, both currencies strength is greatly impacted by the health of economies close to them (unlike the USD). Understanding how these currencies are intertwined to the countries close to them will help tremendously in executing effective GBP/CAD currency trades. Canada and Great Britain don’t have a particularly symbiotic relationship, so looking at all of the factors around them rather than between them would be your best bet.

Spreadbetting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.

 

Alexander Bowring is a London based writer and a Southampton Solent University Screenwriting graduate. He has worked alongside TV personality and Telegraph feature writer Alison Cork, whilst also having produced content for ITV, This Morning, Canvas8, Who’s Jack, Alison at Home, and Bonallack & Bishop Solicitors. Alexander also has a keen interest in investments.