On September 11, 2016, in a surprising turn of events, Canadian Prime Minister Justin Trudeau announced that Canada will be moving to a universal basic income. This could mean good things for Canadians and the Canadian dollar. As long as this trend continues and other countries follow suit then traders have reason to smile. But what does it mean for you if you’re an international trader? What are some implications of universal basic income on your life? This article aims to answer those questions so that you can make sure your financial portfolio includes some exposure to Canada going forward.
Understanding the language of cryptocurrency
One of the toughest things for new traders to grasp is that despite the names, trading terms and jargon used in cryptocurrency trading are not universal. The same words can have totally different meanings depending on which exchange you’re looking at when you come across them. The same goes for any social media. For example, Twitter has been around for years but usually only old users still use it and even they will call it by its actual name instead of Twitters like most people do. This is really true with cryptocurrency trading, you’ll see a lot of slang being thrown around with varying definitions, so we’re going to clarify a few words right now.
Forecast of USD/CAD:
No, this is not some brand new cryptocurrency that has appeared to make capital gains 100% profit overnight. In fact, it’s actually just a forecast of what the USD/CAD exchange rate will be at a specific time in the future. Forecasts are actually quite popular in trading, they can help with timing the market and various other aspects of trading but they do not have any direct influence on whether you will make money or not. A good example of this is momentum trading, which is basically just an analysis that looks for certain buy and sells signals based on price trends.
A turning point is near?
One of the biggest reasons people get into cryptocurrency is to get rich, but as long as you don’t get your hopes up it’s too easy to lose all your money. That’s why many traders use the Forecast of USD/CAD to see if they have a good idea of future price movements. This is done by looking at how prices have changed over longer time periods and comparing them with how they should have been in the future based on support and resistance levels. This is usually only considered ‘good for traders’ if there are a lot more successful cryptos who are already trading in the currency you’re on and you can study their results better than you can by yourself.
Forecasts are not a crystal ball
Another mistake that many traders make is to get their hopes up when they see a forecast. For example, if you look at the graph above you can see there was a big sell-off in late September or early October last year. This would have sent many people into panic thinking that this was going to be the great downturn that everyone in cryptocurrency has been waiting for. However, two months later we saw the exact opposite happen with another strong rise in prices.
The point is that like everything in this market, price movements are more random than anything else and sometimes it takes longer than expected for price trends to start reversing themselves.
Why is the Forecast of USD/CAD important?
Traders generally use the Forecast of USD/CAD before major events that could change the market. For example, CAD is known for being an inflationary currency and therefore we can look at how much inflation there is and if it’s okay to buy-in. Because this market has a lot of volatility and it’s all speculative, you have to be prepared for any possible event that could happen as a price drop, headline, or local news story. This forecast also gives you an idea about when the market may start to fall again so you can get out before prices bottom out.