No luck on my AUD/CHF short currency trade thanks to a swift change in Aussie sentiment after today’s RBA meeting. Here’s a quick forex trade review.
Original Trade Idea: Forex Trade Idea: AUD/CHF Short
We got a bullish spike in the Aussie in the Tuesday morning Asia session thanks to upbeat economic data from the Land Down Under and a not-so-dovish statement from the Reserve Bank of Australia. Both catalysts easily swung forex trader sentiment to the buy side on the Australian dollar, and the AUD/CHF pair up to my sell order with 0.25% risk at .7100.
After a bit of thought, I decided that this morning’s commentary greatly increases the probability of no further rate cuts, which to me is a game changer in that we’ll see profit taking and/or no fresh sellers in the short-term. So, I decided to close my trade manually (.7175) to limit my total loss to less that my planned max loss:
Total: -75 pips/-0.18% loss
In hindsight, I definitely should have taken off the orders ahead of the RBA meeting, but I thought the probability was very low that we’d get anything positive from the RBA, especially with China’s economy and stock market recent turmoil. As always, anything unexpected can happen in the markets and it did, which is why I always practice prudent risk management consistently.
This leaves me with my GBP/AUD long trade, which did trigger on the Aussie rally. I’m leaving it on because I think this week’s U.K. data is probable to come in bullish for the British pound. But of course, I’ll be quick to close out early if the data and sentiment invalidates my trade. Stay tuned!