Both of my open positions closed this past week, one at the profit target and the other…. not at the profit target. Here’s a quick review on both trades and thoughts on how I could have done better.
Closed: CAD/JPY Long Ahead of BOC Meeting
First…the bad news. I originally looked to get long in CAD/JPY a few weeks ago ahead of a potentially not so dovish BOC versus a likely dovish BOJ. We got dovishness from both the Bank of Canada and the Bank of Japan, but traders seemed to be more down on the Loonie on the idea that rate hikes were completely taken off the table at the BOC meeting. And the dovishness from the BOJ actually had no effect on the yen as it was likely the news from China’s central bank on pausing reserve cuts was the bigger driver as it sparked global risk aversion sentiment, driving the yen higher.
So, I got the pullback I was looking for, enough so that both my long orders at 83.50 and 82.50 were triggered. And actually, I got a price improvement on my second order at 82.50 because of this week’s gap open lower; my order was filled at 82.22. But because of the fast rising fears due to the latest negative developments in U.S.-China trade negotiations, it’s likely the yen will continue to rally over the majors in the short-term, so I decided to close out my position manually (81.72) for a very small loss.
Total: -92 pips on avg / -0.32% on 0.50% risk
In hindsight, I probably should have closed down the trade sooner after the BOC totally took rate hikes off of the table, but I thought that rising oil prices would help support the Loonie. We also saw positive comments from BOC Governor Poloz on the second half of the year and on the possibility of rates rising if conditions improve. So, while there were arguments to hold on, at the end of the day global risk sentiment was just too much to hold onto this one for now.
Closed: GBP/NZD Resistance Break-n-Retest
And on to the good news. My small loss in CAD/JPY was offset by the quick profit I made in GBP/NZD. At the end of April, I set orders to go long on a retest of the rising ‘lows’ pattern and ahead of a potentially weak NZ jobs report coming the following week.
The pullback came and triggered my position to go live, and it quickly rallied higher ahead of the NZ jobs report on mystery Sterling strength. I decided to take the gift given to my by the markets as an opportunity to lock in some profits ahead of the event by closing half of my position manually at 1.9521) and rolling my stop to break even to essentially create a “risk-free” trade.
And just a couple of hours later, New Zealand gave the market a net weak jobs report, which quickly brought in Kiwi sellers and pushed GBP/NZD up to my max target at 1.9600 to close out my remaining position.
Total: +160 pips avg. / +0.47% on 0.50% risk
Looking back, even though I had a high conviction that the jobs data would be weak, I still think that it was the right move to reduce my risk ahead of the event. But I probably could have done it differently by keeping my full position and just rolling up my stop pretty tight right before the event. I also could have taken off my max profit target and leave it open, which would have worked out great given that GBP/NZD eventually hitting 1.9700 before stalling, and then hit 1.9900 this week. Yikes! So, I missed out on some pretty big pips, but I’m pretty happy that I was able to get a good return-on-risk on what was a pretty quick turnaround on my idea.
That’s it for now. What do you guys think of how my trades played out? Let me know in the comments section below!
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