A Nice Way To Profit From The Decline In The Canadian Dollar
- After peeking in late 2007, the Canadian Dollar lost more than 25 percent in less than a year-and-a-half.
- However, the currency managed to recuperate, and its price remained considerably high between late 2009 and late 2013.
- Over 2014 and 2015, the notes once again plummeted. Over the past year, the Canadian Dollar tumbled almost 16 percent.
2015 was not a very good year for the Canadian Dollar. Over the 12 months, the currency fell by roughly 16 percent. The decline was attributed to several factors, including falling oil prices, the interest rates on Canadian government bonds and even the expectation that Liberals would win the elections.
So, a couple of questions arise. First off, where will the Canadian Dollar go next? Will it continue to plummet, or will it recuperate? And, will the decline be constant or volatile? Finally, are there ways to benefit from the currency’s moves – other than acquiring the actual currency?
Binary options provide an interesting alternative.
What Are Binary Options?
Trading via binary options is just that: Playing a binary event. “Binary options are limited risk contracts based on a simple yes/no market proposition like will the markets go up by the end of the trading week,” binary options trading site Nadex explained.
Trading Currency Pairs Via Binaries
A classic Forex Binary Option contract may be: CAD/USD (Mon) < 0.70 (2PM)
In this example, the CAD/USD rate is 0.7197.
For traders thinking the CAD/USD rate will continue to fall, and will stand below 0.70 by 2pm Monday, buying this Binary Option could be the way to go.
For those thinking the CAD/USD rate will stand above 0.70 by 2 p.m. Monday, selling these contracts would make more sense.
Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.
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