Is "RateCut" tradeable?
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  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
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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.

  5. #5
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    Quote Originally Posted by cozard007 View Post
    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.
    Yes some time that could be very harmful for trader so better to close the trades on weekend, many trader's want to hold their positions for long term time, mostly long term trader's follow this but when we see a pattern like this then its always in mind that we don't have to leave our trades on on Friday, because on Monday we can see pattern like this in the market. I am a short term trader so don't have any problem with it.

  6. #6
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    Quote Originally Posted by forexlearner View Post
    Yes some time that could be very harmful for trader so better to close the trades on weekend, many trader's want to hold their positions for long term time, mostly long term trader's follow this but when we see a pattern like this then its always in mind that we don't have to leave our trades on on Friday, because on Monday we can see pattern like this in the market. I am a short term trader so don't have any problem with it.
    Well, it might be good for traders to trade the long term, but I will never try the leaving of my trading position active over the weekend when I know there are some important events that is coming up for that weekend. Such important events could be referendum, G7 meetings and other. They can cause a wide cap to the disadvantage of the trader.

  7. #7
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    Quote Originally Posted by cozard007 View Post
    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.
    No doubt it is bad habit to leave a position opened over the weekend but I would like to say that if our trade is in loss then how we close our trade, I think we wait for the market moves in our favor, therefore we leave the position opened over the weekend, hope you will be understand.

  8. #8
    Quote Originally Posted by Nova View Post
    No doubt it is bad habit to leave a position opened over the weekend but I would like to say that if our trade is in loss then how we close our trade, I think we wait for the market moves in our favor, therefore we leave the position opened over the weekend, hope you will be understand.
    I traded forex and left some of my orders opened for weeks because I intend to trade in long term. This was also supported by the pair itself which has high amount of pips movement so the profits would also multiplied alongside the time run. I will not trade in long term and leave my positions opened over the weekend if I am not sure about my analysis. Anyway, since I am a swing trader, it is a normal thing to hold my positions for days just to wait till market reach my target profits.

  9. #9
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    I think it is more dependent on the amount of risk that you can afford, and also on the mentality of the trader. The one who is wildly looking for opportunities to make money for him every opportunity is valuable and he can try his luck on every one of them whether he is sure or not. And this is the reason that such people will definitely trade even at the rate cut. But those people who have some sort of grip over the circumstances they will find or try to explore more appropriate opportunities and they would prefer more superior opportunities to every opportunity that they have so that they may have to pay less and get more reward.

  10. #10
    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.
    Fundamental analysis are important in trading but I am a big fan of technical analysis and using it regularly in my trading. Fundamental news is untradeable many time and personally I don't try to open my positions on news, my first priority to start with my technical analysis, and mostly rely on technical analysis in forex market. But short term trader's can try for news trading, regular practice could give trader's a better experience of news trading too.

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