What is the CAD in Forex?

What is the CAD (Canadian Dollar)?

The Canadian Dollar (CAD) is a commodity currency influenced by crude oil prices, Bank of Canada policy, and global risk appetite. Popular CAD pairs include USD/CAD, CAD/JPY, and EUR/CAD.

Drivers of CAD

• Energy exports: Oil headlines and pipeline disruptions move CAD quickly.
• U.S. economy: Canada's largest trading partner dictates demand.
• Rate differentials: Bank of Canada guidance affects carry trades.
• Risk sentiment: CAD strengthens when global growth accelerates.

Trading Approaches

• Macro themes: Align CAD positions with the outlook for oil and North American growth.
• Cross-pair plays: Use CAD/JPY to express risk appetite shifts.
• Hedging: Canadian exporters hedge revenues using forward contracts.
• Seasonality: Energy demand cycles can create recurring CAD trends.

Practical Playbook

• Define context on higher timeframes, then execute on intraday charts.
• Wait for confirmation (acceptance, momentum, or confluence) before entry.
• Size positions conservatively and place stops at clear invalidation levels.
• Adapt to session dynamics; conditions shift between Asia, London, and New York.

Common Pitfalls

• Forcing trades without alignment across timeframe, structure, and catalyst.
• Ignoring spreads/slippage during news or thin liquidity.
• Moving stops or adding to losers instead of honoring the plan.

Illustrative Example

Build a simple playbook: identify bias, mark key zones/levels, define triggers and invalidation, and pre‑set targets for 2–3R. Journal results by session and setup to refine rules. Over time, consistency—not prediction—drives outcomes.

Practical Playbook

• Define context on higher timeframes, then execute on intraday charts.
• Wait for confirmation (acceptance, momentum, or confluence) before entry.
• Size positions conservatively and place stops at clear invalidation levels.
• Adapt to session dynamics; conditions shift between Asia, London, and New York.

Common Pitfalls

• Forcing trades without alignment across timeframe, structure, and catalyst.
• Ignoring spreads/slippage during news or thin liquidity.
• Moving stops or adding to losers instead of honoring the plan.

Illustrative Example

Build a simple playbook: identify bias, mark key zones/levels, define triggers and invalidation, and pre‑set targets for 2–3R. Journal results by session and setup to refine rules. Over time, consistency—not prediction—drives outcomes.