Given the geopolitical swings and market reactions, I decided to shift to taking fast profits, including the in small CAD/CHF long position I just put on. Here’s a quick review!
Bulls to Take Control on CAD/CHF?
Since putting this idea up last Thursday, the markets went on a pretty wild ride thanks to surprise Brexit headlines and the ever shifting U.S.-China trade war story. My buy order at 0.7450 to play my fundamental bias in favor of the Loonie was triggered during this time, and the position benefited nicely off of both the surprise positive Canadian jobs data and the big shift into risk-on sentiment with both the Brexit story and the U.S.-China trade story giving traders positive vibes into the weekend.
This price action, though, had me adjusting my risk management mindset in that I think we’ll continue to see whipsaws in behavior with every geopolitical news story, so I’ve shifted to lean more towards taking profits more often versus trying to push for 2x or 3x winners…at least for now. Of course, if a move with a strong trending outlook does present itself, I’ll shift quickly.
But for now, I’m taking profits fast, which is what I did today with my small position in CAD/CHF. After an over 100 pip move in the last couple of days, I decided to close the trade manually (0.7532) during the morning U.S. trading session:
Total: +82 pips / +0.20% gain on 0.25% risk taken
Overall, I’m happy with the return-on-risk in a very, very short time (0.8:1 R:R in two trading sessions), but the position size was so small that it’s not a much of a contributor to the overall performance.
Looking forward, my fundamental framework hasn’t changed on either currency, and with another strong Canadian jobs report last Friday, my conviction in a long position in CAD/CHF is still pretty strong. But again, geopolitics is having a really big influence on price action lately, so I think I’m not going to hop back in CAD/CHF until the market pulls back to retest and hold the 0.7400 – 0.7500 area. Canada has a pretty busy calendar for the rest of October, so the volatility will likely be there to present new opportunities.
What do you guys think? Should I have kept the trade on or is short-term trading around this idea the way to go? Let me know in the comments section below!
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