One of the ways of starting forex trading is by choosing an ECN broker and creating an account on its website. On most occasions you might not notice any difference in the forex currency pairs when the price of oil goes up or down. This happens when you are associated with the retail brokers and retail brokers will always make sure that their profits increase no matter how a currency pair is performing in the market. Regardless of whether the prices of oil go up or down, the retail broker will ensure that its profit increases and you continue to trade with exact profits as before.
The benefit of creating an account on ECN broker is that you can benefit from these events taking place in the economy of the world. The ECN brokers ensure that they quote the ask and bid prices of the currency pairs depending on what’s prevailing in the market. They don’t build their own spreads and rather rely on the bid and ask prices that are being offered by other retailers, financial institutions and traders in the market. Looking at all of these quotes the ECN broker will offer you the best ask and bid price for a currency.
Now, the important thing to notice here is that the increase or decrease in the price of oil has been affecting only particular currencies in the forex market. The most noticeable differences have been noticed in Canadian dollar and Japanese Yen. The two nations are operating completely differently when it comes to their consumption of oil. While Canada relies more on using the oil produced by the country itself, Japan relies mostly on importing oil from other countries. The fluctuations in the price of oil thus affect the currencies of these two countries to a great deal.
When the prices of oil go up the Canadian economy becomes stronger. It is because Canada relies on its own oil and by exporting the oil its economy gets a lot of revenue. On the other hand, Japanese economy sees a downfall with the rise in the price of oil. Japan imports most of the oil used in the country and when the prices go up its costs increase. However, the effects are not always that vivid and quick. Sometimes the effects of the rise or fall in the price of oil might take time and thus reliable indicators and resources must be used for trading.
In times when the price of oil is going up or down it is best to get in touch with an ECN broker. The ECN broker will consider the currency’s ask and bid price from all the institutions, individuals and brokers on the network and quote the best prices of all. This allows you to buy a currency at lower rates at a given point in time or sell it at higher rates. Since the spread offered by the ECN is tight, you can benefit by making larger trades. The transparency level of ECN brokers is also higher so you always know what’s happening to your transactions.