USDCAD and oil have negative correlation. When oil prices go up, USDCAD most of the time will fall. You can read this article that explains USDCAD and Oil negative correlation. Since Canada is a major producer of oil that exports most of its oil to its neighbor USA, it means when oil prices go up demand for CAD increases which drives USDCAD down. This is another good article on USDCAD and Oil correlation. So now you know that if you want to trade USDCAD you should keep on eye on the oil chart as well. Take a look at the following oil chart.
You can see in the above screenshot oil price making a rally from $43/barrel just above the red arrow to $50/barrel. Now this means a downtrend should start on USDCAD. Take a look at the chart below!
You can see a strong downtrend on USDCAD. Our first entry is at 1.34097 and the stop loss is at 1.34350. The risk is 26 pips. Suppose we have $1000 in our account. We open the first position with 0.1 lot and the risk is 2.6%. We open the next position just below the second red arrow at 1.33094 with 0.1 lot and move the stop loss to 1.33394. If the stop loss gets hit the first position will have a profit of 70 pips while the second position will have a loss of 30 pips. So net we will have a profit of 40 pips which makes our trade risk free from now on.
We open the third position below the third red arrow at 1.32675 with 0.1 lot and move the stop loss to 1.32800. We open the fourth position below the fourth red arrow at 1.31178 and move the stop loss to 1.31400. We open the fifth position just below the fifth red arrow at 1.30559 and move the stop loss to 1.30800. We close all the positions at 1.29282 just below the sixth red arrow.
The profit from first position is 481 pips or $481. The profit from second position is 381 or $381. The profit from third position is 339 pips or $339. The profit from fourth position is 250 pips or $250. The profit from fifth position is 127 pips or $127. So the total profit is $1578 or 157%.
We opened the first position with a risk of 2.6%. After that our USDCAD swing trade just became risk free. So if you master the skill of risk management, you can make big profit. Always make sure that your risk is not more than 2-3%. As in the above example, risk in the start was 2.6% and later on was zero. Even if the stop loss had been hit we would have ended up with some profit.