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Forex Trading Strategy – Interest Rates Forex Strategy For The USDCAD

For any traders who have been trading for quite some time…

They would also agree that one major news that is exciting to trade is none other than the ” Interest Rates Decision ” every month..

Why is it ” so ” exciting to trade ?

Because it would 99.9% move the market ” quite a bit “…..

And when that happens…You and me could go in and grab some nice valuable pips ( profits ) too!…* smile *

For me ….I only trade the monthly Interests Rate Decision as well as the Non Farm Payroll for the major news release..

These 2 major news can be considered the most volatile ones to trade…

No doubt there are lots of Pips to be grabbed when the market BURST into actions ( BREAKOUT! )..

But one should also enter only if the ” risk ” has been weighed and a concrete exit plan ready in place…

As the saying goes…

” …When You can make pips fast…..You can also LOSE IT FAST ! ”

Here in this post…I will be sharing on the forex strategy I use to trade the BOC Interest Rate Decision…

————————————————————————————————————————–

Let me first share both the ” Consensues & The Actual Results ” :

Consensues :  0.25 %

Actual :  0.25%

( Which was release at 1300 gmt )

—————————————————————————————————————————-

Shortly after the actual CAD interest rates is out….

The market actually ” Breakout ” to the upside for the USD/CAD pair…

( Which means big players are BEARISH about CAD……)

UsdCad Interest Rates Forex Strategy

UsdCad Interest Rates Forex Strategy

At this point….I do not just enter straight away…

As I need more confirmation from the market that it is not a false breakout..

Usually when a breakout occurs, it would also ” retrace big time ” too…

( and trigger our stop loss if it is too tight……so not wise to enter just yet)

So I would wait for the 2nd candle to make my decision to enter…

If it is a ” bearish ” candle closed….I will wait for price to climb again..

If it is a ” bullish ” candle closed…..I will enter with my ” Buy ” order.

( Using a tight stop loss of 50 pips )

Just as with other of my forex trading strategies…I like to gather as much ” hints ” from the market for my BUY bias as possible…

For this USDCAD trade….

Here’s the other 2 strong supportive ” hints “ I have gathered :

1)  Price forming a Strong Support previously  ( red line in the picture )

2)  There’s another news released too at 1230 GMT called the ” Wholesale sales”

The consensus is – 0.4%…

BUT the actual is much worst at – 1.4%…

Which obviously signals that the CAD is even weaker !

This makes my LONG bias for this pair even stronger

With these factors of congruence…

I then enter my BUY order at the next candle closed ( at price 1.04055 )

My Stop – Loss is 50 Pips away  ( at price 1.03555 )

Aiming for a Profit Target of  80 Pips ( TP point at 1.04855 )

Usdcad Interest Rates Forex Strategy

Usdcad Interest Rates Forex Strategy

Just a point to clarify here ..

Usually for all my ” Interest Rates ” forex strategy…

I would be using stop loss of about 50 Pips for most pairs…

But for the Gbp crosses…I will be using abit more ( in the range of 60 – 70 pips ) depending on the market set – up and volatility.

And for the rewards….

I would usually go for the risk/reward ratio of   1  : 1.5

Yes….my profit target for all my forex strategies would be much more at 1.5x at least.

In fact…it is one of the most crucial factor I would consider really carefully before committing into any trade.

Risk/Reward ratio no good for me……no trade for me…..simple !

so…how did this UsdCad trade develop ?

My Take – Profit ( TP ) at price 1.04855 was hit after few hours of trading.

Usdcad Interest Rates Forex Strategy

Usdcad Interest Rates Forex Strategy

For this usdcad pair…

The trade still climb further after I profited 80 pips….

It literally turn into a ” Up-trend ” for this pair…

As this strategy is purely for trading the intra -day market movement ( breakout ) upon the interest rates news…

80 Pips profit target is the maximum I would go for…

Since this Usd/Cad has developed into a Up-Trend…

Would I not ride the trend for some nice pips ?

Of course I would not let such opportunity gone to waste…

But it would be using another different strategy for a ” trending ” market …

More on that in another forex case study…

In the meantime…..

Here’s the earnings screen shot for this Interest Rates Strategy on the UsdCad :

80 Pips from this trade netted me a nice Usd $760 +

Here’s the earnings screen shot to share  ( click to enlarge ):

usdcad interest rates strategy earnings

usdcad interest rates strategy earnings

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