NZD/CAD Trading Tutorial

There are so many currencies in the world that can get exchanged. Only a handful can get traded together on the forex exchange market. The only currencies with high demands are those that are political and stable. Currency pairs are the estimated values between two currencies. This means that one currency is being referenced against the other.

Currency pairs get used for comparing the value of the two currencies involved. One of the currencies gets called the base currency and the other gets called quote currency. The currency listed first is the base currency. The second listed currency is the quote currency. It shows the quantity of the quote currency that will buy one base currency. The New Zealand Dollar can get paired with currencies. An example of such a currency is the Canadian Dollar (CAD).

Factors Influencing the NZD/CAD Trade

The NZD is the abbreviation for the New Zealand Dollar. It is the official currency of New Zealand. It gets represented as $ or NZ$ to differentiate it from other countries using the Dollar.

Although it got pegged to the US Dollar at first, the peg got removed in 1985. This currency went through changes during this period. It later got allowed to float on its own. The Reserve bank of New Zealand got created in 1934. They became the only suppliers of this banknote ever since.

The NZD is one of the most popular currencies on the forex exchange market. It has a very high FX turnover ratio due to the high demand by international traders.

It also has a high yield due to the various foreign investments in the country. Exports and imports are also a major part of New Zealand’s economy. The economy of New Zealand is dependent on agriculture, especially dairy products.

New Zealand’s main export is in its agricultural sector. An uncertainty or fall in the agricultural sector of New Zealand affects the price value of the NZD. Especially on the foreign exchange market.

A rise in the agricultural sector of New Zealand would lead to a rise in the value of NZD.

The CAD is the abbreviation for the Canadian Dollar. It is the official legal tender of Canada.  It gets represented as $, C$, CAD, CA$, or Can$ to differentiate it from other countries using the Dollar.

It got introduced in 1858 and gets issued by the Central Bank of Canada. It got represented as CAD on the global forex market. It is the 7th most traded currency on the market. It is a very important part of the forex market because it has a 10% stake.

The CAD represents the weakness and strength of the Canadian economy. The Canadian currency pairs get regarded as the favorite for retail forex traders.

The Canadian economy is very dependent on the price of oil. This is because Canada is a major oil supplier globally. A rise in the price value of oil strengthens the CAD. A fall in the price value of oil weakens the CAD.

Canada’s main export in its oil sector. A reduction in the export rate of Canadian oil will affect the price value on the trade market.

An increase in the export of oil would lead to a rise in the CAD on the trade market.

The NZD is also influenced by the exchange rate imposed by the Reserve Bank of New Zealand. The interest rate of a currency always has a direct impact on its value.

The Reserve Bank of New Zealand influences the price value in other ways. A simple statement released by the Bank representatives can cause inflation. It can also cause deflation of the NZD.

The Central Bank of Canada can also influence the price value of the CAD. The interest rate placed on CAD can lead to inflation or deflation.

There is news on inflation. Assumptions are being made for it to be at a pace of 5.5% every year. This would further strengthen the hike in interest rates to limit inflation.

Although the news cannot get confirmed yet, traders get advised to wait. Instead of setting a position.

Bearing these thoughts in mind, the expectations persist. That the two curries will be bullish for their price value. The CAD gets expected to rise above the value of the NZD. Unless there is a change in the course of events.

The change in the rate of employment and unemployment also affects the price value of the NZD and the CAD.

Traders get advised to keep track of reports about the economy of New Zealand and Canada. As this may influence their value on the market. This includes reports on Non-farm payroll and PMIs produced.

Trading the NZD/CAD

It is vital to look for changes in the inflation and unemployment rate before trading NZD/CAD. It is also vital to look for industrial production and other factors that may affect the economy.

The NZD/CAD is not a very popular currency pair. They are also hardly offered for trade by brokers.

If a trader predicts the rise of CAD against NZD, then he places a “buy” trade. He places a “sell” trade if the price value of CAD gets predicted to fall against the NZD.

If the trade goes contrary to the prediction of a trader then he takes a loss. Although it is advisable for traders to make use of the stop loss and take the profit option. The stop-loss closes a trade when it gets to a limit. This helps to reduce the loss that may get encountered on trades.

Strategies for Trading NZD/CAD

Swing Trading

Swing trading is one strategy for trading NZD/CAD that has proven quite effective. This strategy involves getting short term to medium term profits in forex trading, this happens over a time frame. It could be for a couple of days or some weeks as the case maybe. 

Swing traders utilize technical analysis to search out trading opportunities. They also make use of fundamental analysis while analyzing the trends and patterns in prices on the forex market. 

When trading the NZD/CHF using the swing trading strategy, the idea is to sell at a potentially critical high and buy at a significant low. This is called ‘go long’ and ‘go short’ respectively. 

This trading strategy requirres a level of patience from the trader or investor as you have to hold your trade for a while which exposes your trade to overnight trading risk as well as weekend trading risk. 

To profit your trade from heavy losses, also have an exit strategy. Know when to cut your losses and set a stop-loss for sell entry. You can place your stop-loss 3 pips lower than the price consolidation. 

NZD/CAD Trading Hours and Session

A trading hour is the best time a currency pair can get traded. The forex market opens on Monday morning while it is still Sunday in most countries. This is because New Zealand is one of the major Financial markets in the world.

A new week for trade starts in New Zealand. It is also called the Sydney Session. The Sydney Session opens at 7 am and closes at 4 pm GMT. It opens from 4 pm to 1 am EST. It also runs from 9 pm to 6 am UTC. These different time frames depend on a trader’s region.

NZD/CAD can also get traded from 1300 to 1700 GMT. This is when the London and New York sessions overlap.

That is when both sessions are open and trades are being placed. The NZDCAD spread is very tight during this period. There is a high level of liquidity at this interval for forex traders.

There are three trade sessions, the European, Asian, and North American Sessions. They can also get called the Tokyo, London, and New York Sessions. This is because trade is most active in these countries.

The European Trading Session (London)

The London or European trade session runs from 8 am to 5 pm GMT. It runs from 2 am to 11 am EST. It also runs from 7 am to 4 pm UTC. It opens before the Asian sessions become inactive.

That is, it overlaps the Asian session. This session is dense on the forex market and consists of major global financial markets.

eIt opens 7hours after the opening of the Asian session and 7.5 hours before the North American session. It gets overlapped by the Asian session, that closes at 8 am GMT by an hour. It overlaps the North American Session, that opens at 1:30GMT in the summer. The North American session opens at 2:30 pm GMT in the winter. 

The North American Session (New York)

This is the last session for trades. It opens when the Asian market has long closed, and the European session is about to close. The North American Session gets dominated by traders in New York.

This also includes trade activities from Mexico and Canada. It also involves trade activities from other countries in South America. The activities of traders in New York dominate this session, causing high liquidity.

The North American session opens from 8 am to 5 pm GMT. It runs from 8 am to 5 pm EST. It also runs from 1 pm to 10 pm UTC.

Regulated Brokers for trading NZD/CAD

Founded in 2009, they offer financial services to over 169 countries. They currently have over 3.5 million users on their platform. They are considered to be one of the top financial brokers in the forex market. Known for their reliability, they are well respected in the financial market. They have many awards earned to prove their transparency and reliability.

They are internationally regulated by the Financial Services Commission. They are licensed by the Cyprus Security Exchange Commission. This is a European License with No. 191/13. They accept a minimum deposit of $10 with a spread floating from 0 pips. 

They offer trade on financial instruments like stock, indices and metals. They also offer trades on ETFs, commodities and forex. They offer a leverage of 1:2000 and margin of 40%.

This forex brokerage platform is recommended for both new and experienced traders. This is because they offer a very favorable trading condition. 

They also offer a unique type of trading called CopyFx or copy trading. This is a unique system where the trades of experts can get copied by novices. The expert trader gets a percentage for every profit made by the novice.

This platform offers a high affiliate payment from $5 per lot. The STP and ECN markets can also be launched through this platform. They also offer an instant withdrawal of funds.

One of the downsides of this platform is that they offer few tools when trading on the R trader platform. Another downside is that they offer few currency pairs for trade. They also offer very few types of account which includes the ECN, Prime, ProCent, Pro.  They also offer the R Stocks Traders account and the Demo Account.

The R Stocks Traders account accepts a first deposit of 100USD. It offers the trade of over 12,000 financial assets. It uses the market execution system in its execution of transactions.

The Prime account accepts a deposit of 10USD or 10EUR. It offers the trade of 28 currency pairs,metals and CFD. It can be accessed through the MT4,MT5 or WebTrader platform.It uses the market execution system in its execution of transactions.

The ECN account accepts a minimum deposit of 10USD or 10EUR. It offers the trade of 36 currency pairs,metals and CFD. It can be accessed through the MT4,MT5, cTrader or WebTrader platform.It uses the market execution system in its execution of transactions.

The ProCent account accepts a minimum deposit of 10USD or 10EUR. It offers the trade of 36 currency pairs and metals. It can be accessed through the MT4,MT5, or WebTrader platform. This account is used for testing strategies. It offers a smooth transition from a demo account to a live account.

The Pro account accepts a minimum deposit of 10USD or 10EUR. It offers the trade of 36 currency pairs,metals and CFD. It can be accessed through the MT4,MT5, cTrader or WebTrader platform.

This account is suitable for new traders as it offers balanced trading.

The Demo account has a fixed amount of fake or virtual money deposited. It offers trades on all currency pairs and assets. It has a limited number of bonus offers. It is used by new traders to practice trading. It is also used by advanced traders to test new strategies.

Capital.com

This platform was introduced in 2016 in the United Kingdom. It was built by a team of hybrid software developers as well as bankers. They offer a unique way of efficiently processing transactions. They also offer commission free trades. That is, a trader only pays the spread fee for buying or selling. The trader also pays the overnight fee if he is making use of leverage to trade. 

This platform is regulated by several regulatory agencies around the globe. One of these is the Financial Conduct Authority in the United Kingdom. Another is the Cyprus Securities and Exchange Commission. They are also licensed by the National Bank of the Republic of Belarus. They receive regulations from Australian Securities and Investments Commission. Each of this regulatory body monitors the affairs of the Capital.com platforn. They also protect the rights and capitals of investors on this platform.

They offer the trade of cryptocurrency and stocks in a single place. Traders do not require the use of complex wallets to trade on stocks and cryptocurrencies. 

Capital.com can be accessed on a desktop as well as a mobile device through the use of their mobile application. They offer the use of a demo account for practice trading. New or novice users can practice and learn about forex trading with the use of the demo account. Experienced users can also practice new trading strategies on the demo account.

They offer zero fee trading. That is, there is no fee charged for deposits, withdrawals or signup. The fees charged are overnight fees for trades on leverage. They also request a very low bid or ask spread. This fee is shown to the trader before he makes a trade. 

The signup proccess on this platform is very simple and easy. They only require a trader’s basic information and a means of identification. That is, a government issued identify card. They offer a low deposit of $20, €20 or £20. This varies based on the base currency of a trader’s region.

Deposits and withdrawals can be made through bank issued cards and electronic transfer. It can also be made through bank transfers and wire transfer. Transfers may take up to 2days to reflect.  Deposits can be made through US Dollars, Pounds or Euro. 

They offer the trade of assets like stocks, currency pairs, ETFs, commodities and indices. They also offer trades with cryptocurrencies

Conclusion

The trading of foreign currency pairs can be very profitable as well as risky. Traders get advised to study the market very well. It is also necessary to be well grounded with news updates

Especially news on the currencies traded. New Zealand focuses its export more on the agricultural sector. They export dairy products to other countries. A fall in the export rate may cause the CAD to rise above the NZD.

Canada focuses its export on oil. They are well known as the largest oil producer globally. Any rise in the rate of exportation of oil would cause the CAD to rise against the NZD.

The interest rate of the Canadian economy can be most influenced by the Central Bank. A drop in the interest rate may cause the CAD to fall and the NZD to rise.

Traders get advised to place using the risk management tools. Tools like the stop-loss help reduce the risk of making huge losses.

Frequently Asked Questions