I’m gonna give myself a small pat on the back for trailing my stop lower and locking in gains with this AUD/JPY short trade. As I’ve mentioned in my trade adjustments blog post, I had a feeling that volatility was about to pick up leading to the EU referendum and with BOJ officials hinting at a possible forex intervention.
I was able to enter this short position at 77.85 on a range breakdown then price dipped to the 76.25 area before I decided to roll my stop down to 77.25. That way, I could still be able to end up with gains even if price does make a sharp rally.
As it turned out, risk appetite made a comeback prior to the EU referendum week as some Brexit surveys indicated a lead in favor of the “remain” camp. AUD/JPY even gapped up then as traders likely booked profits off their previous short positions ahead of the actual event.
With that, my adjusted stop loss was triggered, giving me a small 0.05% gain on my account. I can’t help but wish that I had just closed around those 76.25 lows for a much larger win, but a gain is a gain so I’m happy with it. Besides, looking at the volatile price action that followed shows that my original stop at 80.75 would’ve gotten hit on that spike higher before the pair plummeted to my max profit target at 74.75.
All in all, there are still some lessons I picked up from this trade, such as being more patient with a pullback or reminding myself to scale my entries with a nibbler position plus a more conservative entry. And during times when I feel that risk sentiment would take a huge turn, I should be more open to the idea of closing at market instead of simply trailing my stop.
With that said, what kind of adjustments do you think should I make on my GBP/USD short position?
As always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.