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Forex trading is the simultaneous buying of one currency and the selling of another. Currencies are traded through a broker or dealer, and are traded in pairs; for example the Euro dollar and the US dollar (EUR/USD) or the British pound and the Japanese Yen (GBP/JPY).Forex trading is always done in currency pairs. The value of your Forex investment increases or decreases because of changes in the currency exchange rate or Forex rate. Forex Trading is the world's largest financial market with an estimated daily average turnover between $2.5 trillion to $3.0 trillion that we cannot doubt.Forex trading is the potentially most lucrative home based business at the moment. It is a business where you can earn an income without selling anything, without pitching a sale to people and without running around after clients. Forex trading is becoming very popular nowadays because in it there are so many additional methods that can be used to get into the markets which are not available through the New York Stock exchange.Forex trading is something that many people do not understand very well. While they hear of the dollar "fluctuation" they never quite understand the process or what it means. Forex trading is not easy however it does provides significant potential for profit, as more and more people are discovering. In this review, I want to provide information to help you decide whether Forex trading is for you. If you do have risk capital and the inclination to learn Forex trading can be an ideal home business.
Showing posts with label learn forex trading. Show all posts
Showing posts with label learn forex trading. Show all posts
Aug 12, 2008
Forex Trading As A Home Business | ForexGen
Aug 5, 2008
Forex Currencies | ForexGen
Canadian Dollar: End of Month Trading Anomaly - Forex Trading
Did you know that the Canadian dollar has a very unique trading characteristic at the end of every month? According to our statistical analysis, we found that over the past 10 years, USD/CAD tends to fall in the last week of the month with a 95 percent confidence level. A more granular look at the data reveals that this drop is predominately concentrated around the 24th and 25th day of every month. Interested in knowing why this happens?
Settlement of Oil Futures
The trading anomaly in USD/CAD stems from the fact that Canada is one of the world's largest oil producers. Their oil reserves are also second to only Saudi Arabia. Canada is also the top exporter of oil and other petroleum products to the United States, making the US dollar-Canadian dollar exchange rate especially correlated to energy prices and related money flows.
Therefore it is not surprising that the movement of the Canadian dollar is especially sensitive to end-of-month oil contract settlement. It is fairly easy to determine when firms are required to settle outstanding oil contracts and potentially convert US dollars for loonies on a monthly basis. More specifically, it is well-known that oil futures settle in the final week of every month.
Looking at the table below, we see that a 10-year sample of data shows the biggest appreciation in the Canadian dollar against the US dollar happening in the final week of every month. In other words, on average, USDCAD falls 6 points per day in the final week - a result statistically below 0, at a 95% confidence level. Six points is hardly worth getting overly excited about since it is difficult to take advantage of such a small price move on a vague, weekly basis. However when we take a much more granular look of the USDCAD's behavior around specific days of the month, the moves becomes more substantial.
The Canadian dollar can tend to appreciate the most on the 24th and 25th day of every month, with continued gains into the early days of the month that follows. This dynamic is exactly consistent with settlement on oil futures a contract, as the “notice day” - the first day on which the purchaser may be called upon to take delivery - is typically between the 22nd and the 24th calendar day.
Namely, it seems as though the Canadian dollar moves the most following the Notice Day, while the First Delivery Day likewise causes some strong moves in following month. Given that the Notice Day occurs today, August 23rd, it is especially interesting to note that the Canadian dollar has appreciated strongly against yesterday's close.
The statistical relationship showed signs of waning through the early months of the year, but it has clearly picked up from June through August. Given such a relationship, it seems clear that the USDCAD stands to continue declines through the short-term - leaving Loonie appreciation probable in upcoming days of trade.
Settlement of Oil Futures
The trading anomaly in USD/CAD stems from the fact that Canada is one of the world's largest oil producers. Their oil reserves are also second to only Saudi Arabia. Canada is also the top exporter of oil and other petroleum products to the United States, making the US dollar-Canadian dollar exchange rate especially correlated to energy prices and related money flows.
Therefore it is not surprising that the movement of the Canadian dollar is especially sensitive to end-of-month oil contract settlement. It is fairly easy to determine when firms are required to settle outstanding oil contracts and potentially convert US dollars for loonies on a monthly basis. More specifically, it is well-known that oil futures settle in the final week of every month.
Looking at the table below, we see that a 10-year sample of data shows the biggest appreciation in the Canadian dollar against the US dollar happening in the final week of every month. In other words, on average, USDCAD falls 6 points per day in the final week - a result statistically below 0, at a 95% confidence level. Six points is hardly worth getting overly excited about since it is difficult to take advantage of such a small price move on a vague, weekly basis. However when we take a much more granular look of the USDCAD's behavior around specific days of the month, the moves becomes more substantial.
The Canadian dollar can tend to appreciate the most on the 24th and 25th day of every month, with continued gains into the early days of the month that follows. This dynamic is exactly consistent with settlement on oil futures a contract, as the “notice day” - the first day on which the purchaser may be called upon to take delivery - is typically between the 22nd and the 24th calendar day.
Namely, it seems as though the Canadian dollar moves the most following the Notice Day, while the First Delivery Day likewise causes some strong moves in following month. Given that the Notice Day occurs today, August 23rd, it is especially interesting to note that the Canadian dollar has appreciated strongly against yesterday's close.
The statistical relationship showed signs of waning through the early months of the year, but it has clearly picked up from June through August. Given such a relationship, it seems clear that the USDCAD stands to continue declines through the short-term - leaving Loonie appreciation probable in upcoming days of trade.
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