Paper trade: 50% long USD/CAD @ 1.06754

As I’ve said before, I’ve been observing the forex market hoping to dabble in it later on once I’m confident of my strategy. Here’s a first paper trade in the forex market. I went through the charts of some favourite pairs and find that the USD/CAD offers a good reward/risk opportunity. From Figure 1, here’re my targets. The entry price timing is based on the 30 min. chart of Figure 2 but it doesn’t matter much for this paper trade as I’m testing the longer term strategy and not my entry/exit timing.

Entry: 1.06754

Other 50% Stop Entry: Break above 1.113

Stop: 1.0593

Target: 1.15

Reward / Risk = (1.113 – 1.06754) / (1.06754 – 1.0593) = 0.04546 / 0.00824 = 5.5 > 5

As this is a trade based on the daily chart. So it should take a few weeks to know which way this will go.

Also notice that I’m not entering a full position on entry as I’ve usually done. I’m going to try a 50/50 entries/exits method to minimize my risk. A benefit of forex is that there’s no commission (brokers make money with the spread), so there’s no up-front penalty for me to break up my trades to multiple entries/exits.

USD/CAD daily chart

USD/CAD 30 min. chart

USD/CAD holding on to intermediate term support at 1.0868

I’ve been seriously studying the forex market for the past couple of weeks. This post is my first official jab in this area.

What better way than to start with the USD/CAD currency pair as I’m a Canadian myself. And it just so happens that the USD/CAD is at a major pivot these past couple of months. See Figure 1.

The fall of the USD/CAD from a peak around 1.60 in 2003 to below 0.90 in 2007 has been unforgettable. In fact, USD/CAD is still trading around its shadow as seen in the test of both the resistance and support Fibonacci fan lines (Figure 1).

While I’m not ready to predict which way the pair will trend (something that rhymes with yup), it’s clear that the fight between 1.0868 – 1.093 will be an important battle. Breaking below or above it would cause a sizable short term move.

USD/CAD 20-year