Made a quick adjustment to my stop on AUD/CAD short ahead of the Bank of Canada monetary policy decision. After the announcement the market spiked higher to take me me out of my trade. Here’s a quick review.
Original Trade Idea: Forex Trade: AUD/CAD Short
It looks like sellers took advantage of the pullback to .9700; the market barely had time to stop and smell the roses before sellers took back control and quickly pushed AUD/CAD lower. Most of the following downward pressure came from Aussie weakness sparked by a recent string of weak Chinese data and pressure in the commodities market (Australia and China are huge trade partners in raw materials).
Today, we got the Bank of Canada was set to make their latest monetary policy decision and it was pretty uncertain if the rate cut earlier this year was a “one and done” or if the recent economic environment warranted another cut and/or dovish rhetoric from BOC officials. So I decided to adjust my stop to .9560 (from an earlier adjustment to breakeven), which was quickly triggered after the BOC announced it held the overnight bank rate at 0.75%, citing a stabilization of oil prices. Trade closed and I closed my additional short order at .9850.
Total: +141 pips/ +0.42% gain
Now that the market has had time to process the news, it looks like my stop adjustment was too tight now that market is buying up the Loonie big time. The idea was to get out quickly if the market went against me and jump back in short at a higher price. Obviously, not the best move given the outcome, but an adjustment that makes sense given the uncertainty before the event.
I’m definitely kicking myself at the moment, but I guess I can take a little comfort in the small profit I was able to walk away with…I guess… I don’t have plans for now to jump back in with this big drop, but I’ll be definitely watching out for a pullback because I’m still bearish the Aussie and it looks like oil really is stabilizing. Stay tuned!