Is "RateCut" tradeable?
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Thread: Is "RateCut" tradeable?

  1. #1

    Is "RateCut" tradeable?

    For the traders that didn't know the meaning of a rate cut, let me explain it first. Rate cut means central bank cuts their initial deposit rate. So that simply means they reduce the interest if you want to save money in the bank. Rate increase means they raise the interest ; different from cutting rates.

    Usually this kind of event will make a currency bear quite a lot. And as for the question; is it tradeable?

    You need to watch whether the event is expected or not. When you take a look at the forex calender about the event, if the majority already expecting a rate cut then it's already priced in. Most of the cases, when it's already predicted then it's priced in. And then when you enter the market under such timing, you will be risking your trading account because the direction is simply unpredictable.

    What kind of condition is the best to trade in these events?

    It is when the "RateCut" is sudden. You can take the advantage of the surprise because there are not much people have traded that pair so the current price in the market haven't pricing in the event. As the example of the impact, take a look at this.

    This is a screenshot from USD/CAD pair (they just cut their rate last week)

    Maybe some question may arise upon looking at this, can i trade in this volatility?
    Yes you can, after you have checked the data, the market will still move towards one direction.
    If you want to enter the market in the volatility then first make sure to do these so you can get a smoother trade
    Tools> Option >Trade
    Watch the trade deviation and set it to 100 pips and click the "one click trading"

    Hope you guys can get a good profit with this!

  2. #2
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    Well, nothing is untradeable in the forex market, even at the most extreme market volatility. And as for the rate cut issues, it is possible it supports the currency they cut its country's interest rate or it might go against it. The determinant of that would be the expectation and interpretation of the trader to it in relation to the economy situation of the country at that present moment. So, forex traders should have to read, digest and analyze the cut implication before they trade it.

  3. #3
    Quote Originally Posted by cozard007 View Post
    Well, nothing is untradeable in the forex market, even at the most extreme market volatility. And as for the rate cut issues, it is possible it supports the currency they cut its country's interest rate or it might go against it. The determinant of that would be the expectation and interpretation of the trader to it in relation to the economy situation of the country at that present moment. So, forex traders should have to read, digest and analyze the cut implication before they trade it.
    I think that there are some that's untradeable things as well and that is the events that happen in Sunday. Well, you might still can trade them as long you left your position open over the weekend but that would be gambling. It's because we need to watch properly the event and then we need to trade that by ourselves. as for rate cut, we will need to gather the date needed to forecast when the cut will begin.

  4. #4
    Registered user Quid's Avatar
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    I think it need to see the chart pattern and the market with the rate.If the trading with rate is tradable with the news then the traders need to learn about the market management and how the rate can make the big different in a country when the traders want to trade too.They are more successful too with the good market trading plan.They are successful too with the market trading planning which is profitable.

  5. #5
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    Quote Originally Posted by sekiryutei View Post
    I think that there are some that's untradeable things as well and that is the events that happen in Sunday. Well, you might still can trade them as long you left your position open over the weekend but that would be gambling. It's because we need to watch properly the event and then we need to trade that by ourselves. as for rate cut, we will need to gather the date needed to forecast when the cut will begin.
    It is really a bad thing for any trader to leave a position opened over the weekend, not to talk of knowing that an important even is going to happen about that time. Forex traders should not be frustrated, I see that means of trading to be a frustrating means and the traders that are so desperate are the ones trying it out. As for the rate cut, it is tradable, but traders should analyze it very well.

  6. #6
    rate cut means that there will be more currency in the market as the loans will be cheaper for that currency and since forex markets are moved by the forces of supply and demand then the currency with the rate cut will lose its value as their will be an increase in its supply in the market

  7. #7
    Thank you very much for sharing this "RateCut". Actually in before I didn't know about this "RateCut" though I saw this situation befoe. But I didn't know why sometimes market go a long movement in a short time. And thanks again.

  8. #8
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    Quote Originally Posted by kagho View Post
    rate cut means that there will be more currency in the market as the loans will be cheaper for that currency and since forex markets are moved by the forces of supply and demand then the currency with the rate cut will lose its value as their will be an increase in its supply in the market
    Well, I do not read my rate cut directly as you have said. The main interpretation of the market to the rate cut depends on many factors. This is why some rate cut would reduce the price of the currency, while some would increase the price of the currency. It shows that it is the status of the economy of the currency and the trader's expectation that would determine its movement. Above all, the rate cut would keep more money into circulation as more investors would take that advantage.

  9. #9
    I think that these shapes fro the trading can happen at the time of the news only . so the matters for the trading must be calculated very well and avoid the trading at teh times of the news releasing . the thing which may get us save of being betrayed by the market . al of the reactions may be so good when we can think of the trading plans ,.

  10. #10
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    Quote Originally Posted by hosny55 View Post
    I think that these shapes fro the trading can happen at the time of the news only . so the matters for the trading must be calculated very well and avoid the trading at teh times of the news releasing . the thing which may get us save of being betrayed by the market . al of the reactions may be so good when we can think of the trading plans ,.
    Of course, the rate cut trading is a news trading. But this is not easily calculated the way you think, you need to read the prevailing situation in the country first, then you will know the sentiments of the traders with it. If all these are put together, you would actually know where the rate cute would go at a certain point in time. In other words, it could go either way.

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