CADCHF trading tutorial

CHF is the abbreviation of the Swiss Franc, that’s Switzerland’s national currency.

The currency was introduced in 1850 and was at the same level as France’s franc.

It was pegged to the US dollar in 1945 after Switzerland joined the Brent Wood system. At that time, its exchange rate to the USD was 4.375franc to 1dollar. But it was later taken off and pegged to the Euro until 2015.

In the year 2000, the European debt crisis caused investors to seek out a financially secure environment for their investments in case of a crash in the stock market. Switzerland was the best option since it is a neutral country with a stable political and financial system and a thriving economy. Due to this crisis and the move by investors, the value of its national currency increased considerably and exceeded both the US dollar and the Euro. 

A good part of its economy is made up of foreign investments while other aspects include the exportation of chemicals, watches, textiles, and machinery.

Switzerland is considered the safest economy in the world, and its franc is one of the major currencies in the financial market. 

40% of the Swiss franc is backed by gold reserves. As of 2021, the currency is not pegged to any other one. It is traded alongside major and minor currencies in the forex market, such as the Canadian dollar and the Japanese Yen.

In this article, we focus on the Swiss franc and the Canadian dollar cross. We’ll learn different strategies to trade this pair profitably in the foreign exchange market.

What is cadchf?

In a forex chart, the CadChf represents the Canadian dollar and the Swiss Franc. The former is the base currency here, and the price quote shows you how many francs you need to buy 1 Ca dollar.

For example, if the price quote shows CADCHF = 0.723, it means you can exchange 1 Canadian dollar for this quoted price.

The price of gold is a crucial factor influencing this exchange rate as Canada’s economy relies majorly on gold and oil. And a quarter of Switzerland’s currency is backed by gold.

The US and the Eurozone’s economies also strongly influence the pair’s exchange rate since they are major trade partners to Canada and Switzerland.

Both countries enjoy political and economic stability and growth.

The Canadian dollar and the Swiss Franc are major currencies and are among the 8 that make up 80% of the forex market’s liquidity. That is, the pair are part of the top-8 most traded currency. 

Though together they are considered a minor pair in the forex market and not as liquid as the major ones. Traders and investors find the CadChf appealing due to its relatively low volatility and the fact that it maintains a good level of liquidity. 

What time does the CHF market open?

The Swiss market is open from Sunday 5 PM CET to Friday 4 PM.

Traders have the opportunity to open positions anytime they like within this period. Though timing affects profitability as spreads usually increase. Also, prices depend more on algorithms during quiet periods in the market. One should trade when the market is active to increase their chances of profit.

Canada uses the Americas trading session in which trade begins from 5 PM EST on Sundays and closes at 5 PM on Friday.

How to trade CADCHF pair?

To succeed in trading the pair, there are a few steps you need to take:

Step 1 Analysis

Analyze the pair by looking at its historical prices. It will help you predict the future price moves of this pair.

Step-2 Come up with a trading strategy or strategies for the CADCHF

Reseach different strategies to discover which ones can be profitable with this pair. We will explain several helpful approaches shortly.

Step-3 Sign up with a good broker

The brker you choose can have a huge influence on your profit. So it is paramount that you trade with a good broker with a license and the best offer in terms of fees and spreads.

After completing your registration and getting your new account activated, it is time to trade.

Follow these steps to trade the CADCHF pair

1. Deposit money into your account

Your broker should provide easy payment methods for you to credit your account with funds. The broker will also support you to do this. The money you sent should be credited into your trading account in full. Most good brokers do not charge any fee for this.

2. Choose the CADCHF crosses

On your dashboard, click on quotes to see the list of currency pairs. Each pair would be listed with the ask, the bid price, and the spread. The spread is the difference between the Ask and the Bid price; it’s the broker’s fee for the trade. Scroll and select the CADCHF. 

3. Enter a position

Once you click on the pair, 2-positions and 2-prices are displayed. The 2-positions are the BUY and the SELL. If you enter a buy trade, you are investing in the CAD, expecting it to strengthen against the CHF. If it is a sell trade, you are betting in favor of the CHF. 

4. Exit the position 

To exit your position at your appropriate time, click on close. That ends that trade and secures your profit in your trading account. 

Since this is a minor pair, some broker may not offer the opportunity, as they like to focus on the most liquid forex pairs, which is the major ones.

So you have to ensure the broker offers the CADCHF forex pair before registering with them.

For this, we can safely recommend Vantagefx, Roboforex, and markets.com. Though, many others are offering the asset. We know that these brokers are legit and easy to sign up with.

Here’s a summary of what to expect from them

Vantagefx

efx is rated 4-star on the Trustpilot review platform for its responsive support service. Support is reachable 24-5 via phone, live chat, or email.

  • Year founded and HQ 

Founded in 2011 with its headquarters in Sydney. It is now present in 172 countries and has 30 branch offices globally. 

  • Regulations

The broker is licensed by its home regulatory body, ASIC. And the regulatory authority for the Islands, CIMA. This gives it credibility and traders assured of its legitimacy and transparency.

  • Minimum deposits, fees, and spreads

$200 is the minimum initial amount required for trading. Vantagefx offers competitive spreads as low as 0pips for major pairs. The average spread for the CADCHF pair is around 2.3pips. There are no charges on deposits and withdrawals, but some deposit methods may attract a fee. Overnight fees depend on the currency pairs held. There are no charges on withdrawal,

  • Trading platforms

Traders can use either the Mt4 or the Mt5 Mobile and web trader. 

  • Assets offered

You can trade over 180 assets such as forex pairs, indices, stocks, and CFDs.

Плюсы

1. Straightforward account set up

2. Easy deposit and withdrawal with multiple options

3. Low fees

 Минусы

1. Comparably limited asset options

2. High fees on CFDs

Roboforex

  • Customer support services

Roboforex rating is a little lower at 3.4 stars on Trustpilot. But they are said to offer good services, and are available 24-5 through live chat, phone, or email.

  • Regulations

The broker is authorized by the broker regulatory body in its country of origin, Belize, by the IFSC. It also holds a license from globally recognized Cyprus regulatory body, CySEC.

  • Spreads, Minimum deposit, and fees

Minimum amount to begin trading is $10. Spreads starts from 1.3pips for major pairs and 2.9pips average spread for CADCHF pair. Deposit and withdrawal fees are not charged.

  • Trading platforms

Multiple trading plaforms are available, such as Mt4, Mt5, cTrader, RTrader.

  • Assets

The broker offers many opportunities with over 9000 assets, including 40+ forex pairs, indices, commodities, stocks.

Плюсы

  1. Good trading conditions, with a wide selection of assets.
  2. Fast and easy withdrawal of funds
  3. Copytrading is available. 

Минусы

  1. Limited cryptocurrency options
  2. A limited number of currency pairs on Pro-cent and ECN accounts.

Markets.com

  • Customer ratings: Rated 4.2 on Trustpilot 
  • Year founded: 2008
  • Headquarters: UK
  • Minimum deposit: $100
  • Regulations FCA ASIC FSCA 
  • Leverage: 1.300
  • Spreads: From 0.6pips for major pairs. 
  • Assets: 2200+ with 
  • Platforms: Mt4, Mt5, MarketX, Marketsi.

Плюсы

  1. Large varieties of assets to trade
  2. Competitive spreads and fees

Минусы

  1. High fees on commodities and indices

Strategies for trading CADCHF

The strategies listed below are effective with the CADCHF cross:

  • Range trading strategy

You can spot a range in the market where there’s neither uptrend nor a downtrend in the price. In this case, the prices move sideways within horizontal lines. 

Traders also call this condition a flat market or Price consolidation. 

You should look to take a long position when the price is at the bottom of the range. And enter a short trade when it is at the top. 

This approach is suitable for the CadChf pair because of its relatively low trade volume and volatility.

This strategy only works when there are NO trends in the market. 

The main disadvantage here is that a breakout could occur without warning. And sometimes, it could be false, making it difficult to know when’s the best time to enter or exit your position. 

  • Support and resistance range trading.

Identifying both points in a range market can be hard since the prices move along horizontal lines. 

The lines connecting the prices at the bottom of your chart show the support level, whereas the horizontal lines at the top are the resistance point.

The strength of the support and resistance points is affected by the length, height, and volumes traded in each area.

So, to trade the CADCHF, enter a buy position as the price approaches a support level or a sell position where it proceeds toward a resistance point.

  • Diagonal range trading approach

In a diagonal range market, prices move upward or downward through a slope. The pattern is not unusual in forex charts. Traders find it useful as it helps them foresee a breakout before it occurs and place a winning trade accordingly. 

Though sometimes the breakouts take longer than expected. So it becomes tough to decide on what trade to place.

  • Continuation range trading.

This pattern usually occurs within a trend, so traders like to trade them as breakouts.

They usually form to correct the current trend and signal either a bearish or a bullish market condition. 

The problem with it is it gets difficult to spot this pattern since it usually occurs during a trend. It can manifest anytime at the beginning.

When trading the CADCHF pair with a range strategy, you will need to properly set up your trades by entering and exiting at the appropriate time.

Typically, you should buy near support points and sell near resistance. Traders use indicators such as Oscillators or Price channels to help with this setup.

  • Positional trading strategy 

This is a long-term trade often called ‘buy and hold

It involves entering a position when you expect a trend that could last for weeks or months. Then hold that position as long as the trend continues.

Traders sometimes hold positions for up to 1-year, not minding minor fluctuations or pullbacks in the market.

The approach is quite simple and requires some fundamental analysis, such as the economic data of both countries. Additionally, monitoring your trade is a necessity.

For a pair like the CADCHF that has less volatility, a positional trading strategy is a welcome approach. 

Your goal here is to ride the predominant trend while accumulating profit.

It does not require technical analysis, though some traders use them to come up with other interesting approaches to trade positions.

These other approaches include:

  • Simple Moving average

Using the Simple Moving Average, traders can look at historical prices and identify patterns to forecast when and in which direction the price will move.

For example, after analyzing a 50, 100, or 200-day price, if you spot price movements at specific times within these periods. With this, you can predict the next price move.

Traders combine this approach with some economic information, and they enter positional trading based on the insight they arrive at.

  • Moving Average Convergence/Divergence(MACD)

This approach employs the EMA (Exponential Moving average) to track trends and enter a position. 

It is the difference between the 12-day EMA and the 26-day EMA, so it does not always indicate a long-term trend.

To trade the CADCHF with this indicator, watch out for when the Macd crosses the ‘signal line. That will be an opportunity for a BUY trade.

Identifying a trend and having an idea of its time length will increase your chance of making a profit. 

One main flipside with this approach is that there is a chance that the minor price fluctuations that you ignore could become a trend and lead to huge losses.

So you must constantly keep a careful eye on your trade and take all necessary precautions by ensuring your risks settings are in place when trading positions.

  • Carry trade

In carry trade strategy, you place a buy or a sell trade on the CadChf and hold your position long enough to benefit from the ‘interest rate differentials.

That’s the difference between both countries’ interest rates.

In a carry trade, you are borrowing one of the currencies while buying its pair. 

The difference between both interest rates becomes your profit.

There are 2-types of approaches in the Carry trade

  • Positive Carry trading strategy

In a positive carry trade, you are borrowing the currency with the low-interest rate, in this case, the Chf, and buying the one with the high-interest rate(the Cad).

Let’s say the interest rate on the Chf is 0.6%, and on the Cad, it’s 2.5%.

The positive carry value to you will be 1.9%.

If the position you entered is worth C$5000, this means you will gain 1.9% of 5000 in addition to your profit on the trade.

But if the interest rate drops, it could result in a significant loss. Essentially, you should carry out a thorough fundamental analysis before using this strategy. 

  • Negative carry trading strategy. 

In a negative carry trade strategy, you borrow the high-interest currency, while buying the low-interest one in hopes that the low interest will increase and reach or surpass the high-interest currency. 

Using the example above, you will be borrowing the Cad while buying the Chf, with the assumption that the Chf interest rate will rise and surpass the former. Your trade will then have a negative carry value of 1.9%.

Note that you will be paying interest on the quote currency here until it rises. So your carry trade indicates an initial net loss with a potential net gain.

The main drawback with this strategy is that the currency you are borrowing could suddenly increase in value, leading to great loss.

Carry trade strategies mainly depend on fundamental analysis, so staying up to date on business news and interest rates can help you use this approach effectively.

Вывод

The CADCHF cross is a profitable pair in forex trading if you follow the correct steps to trade them. As a minor pair, it is not as liquid and volatile as others. But the opportunity to profit from it abounds. Staying up to date in economic news and finding suitable technical indicators can help you make a good profit from this pair. 

Witzeltrading.com

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