5 min read · Feb 19, 2018
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By Johnathan Holland with Chris Bourgeois
Statistics in our article have shown that there are better days of the week to exchange currency to increase savings for your bottom line by as much as $13,405.84 each year!
We analyzed 10 Years Worth of Trading Data to Determine a Formula for Saving Money
The Idea of the Case
Many of the businesses we service make payments on the 1st business day of each month.
We wanted to find out if there were better times to make these payments based on the daily exchange rate fluctuations.
All data is based on a business that exchanges $100,000 each month.
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The following two strategies prove to be very lucrative with CAD & USD currency pairs:
For CAD to USD you can save up to $13,405.84 each year.
“I have CAD and need to exchange to USD each month to make a payment(s)…”
It is proven if you wait until the first business day of each month (green above) and exchange your CAD to USD you will save $13,834.89 every year.
The worst thing you can do is evenly average out your exchanges over the last 5 business days of the month (red above)!
Exchange an even amount of currency over the last 5 Business Days of the month.
With USD to CAD you can save $8,483.52 annually!
“I have USD revenue and I need to exchange to CAD each month, but I never know when to exchange it…”
If this is you then you are not alone. 76.3% of Canadian exports are sent to the US and these companies are paid in USD.
The best bang for your buck is to evenly average out your exchanges over the last 5 business days of the month, with savings of $8,137.92 annually.
Don’t follow the same footsteps as your CAD to USD exchanges, because if you exchange all your funds on the 1st business day of the month you have chosen the worst option.
CAD to USD is very straight forward. Just exchange on the 1st of each month, but what about USD to CAD?
Let’s analyze our options..
A) Use your Banks online platform (and get killed with the foreign exchange cost)
B) Use a foreign exchange company that has been around a while and call the trader every business day for the last 5 business days of the month.
C) Use a fintech foreign exchange business where everything is online (with NO commissioned trader on the other end) and have this trade automated. Read more about Fintech Companies Here.
A) Using your bank to exchange USD to CAD is fairly easy to do, but they are unapologetically expensive.
You would typically go to your online banking and the bank will gladly let you click a button allowing you to move your USD over to your CAD account.
But, they will gladly take 3% of all your money and for what? The computer system processed it. There is no need for such high fees only that they can get away with it.
B) At least with a foreign exchange company you get some savings.
Depending on the volume you’re doing they might charge 1.5% — 2.5% instead of the 3% a bank might charge.
And with the best USD to CAD strategy you need to call the trader for 5 days in a row AND make sure she/he isn’t trying to rip you off since they are never transparent to the actual fees. They prefer to give you an ‘exchange rate’, which is a fancy way of hiding the true cost of the transaction.
Remember they are directly commissioned on your trade. They want more!
C. There are two types of fintechs to consider:
1) Will make it easy to go online to place the order, but you will have to place it each day (similar to your online bank option) for the 5 days and remember to do this.
2) At least one fintech allows you to “opt-in” to this 5 day strategy and the company automatically executes this strategy for you.
In both scenarios, the company charges you the same low percentage cost on the foreign exchange and you would save $134,152.48 over 10 years by doing so.
