We’ve got the highly anticipated Reserve Bank of Australia’s latest monetary policy decision next week, and after a solid run for AUD bears over the past couple of weeks, I’ve decided to make quick adjustments to my AUD short positions to lock in profits and reduce risk.
AUD/USD Back to the Downtrend?
Last week, I decided to short AUD/USD with a couple of nibbler positions ahead of the monthly Australian jobs data. The event turned out to be somewhat mixed as we did see job growth, but the unemployment rate ticked higher to 5.3% from 5.2% as more people joined the work force. The reaction was a bearish one for the Aussie which was a good thing for my first nibbler entered at 0.6828 , but it meant that my second short order at 0.6875 is not likely to be triggered any time soon.
I’ve currently got a nice but small gain on AUD/USD, and with the RBA meeting early next week, I’ve decided to reduce my risk by rolling down my stop to just below break even at 0.6820 and close my open short order at 0.6875.
So, this is pretty much a risk-free trade on a very small position, and if the downtrending momentum continues after the RBA meeting next week, I’ll look to adjust once again to maximize the potential profit, depending on what what the RBA says.
Downtrend Bounce in AUD/CAD?
In my last update on my AUD/CAD short position, I decided to reduce my risk on a full short position by rolling down my stop on from 0.9210 to 0.9120, which took my max risk down from 1.00% to 0.39%. As I said above, with the RBA meeting just around the corner, I think it would be prudent to reduce risk more on this position, which is currently up 0.68% on 1.00% taken.
I decided to lock in gains by closing a little over half of my position manually at market (0.8961) and rolling down my stop to 0.9070, which is just above my average entry price. This adjustment locks in a 0.34% gain on 1.00% risk, which is not bad to walk away with if the market flips sentiment on AUD/CAD after the RBA meeting. Overall, I think it’s a possibility the Aussie could rally after the event on profit taking given the downtrend in the past couple of weeks, but I wanna keep some capital in play just in case the RBA surprises with bearish rhetoric and/or deeper cut than the 25bps expected by the market.
If the market stays bearish, I’ll look to add back to the position and/or roll down my stop further. Stay tuned for that update and let me know what you think of these adjustments. Did I roll down my stops too soon? Should I add to the position instead? Or maybe I should just sit on my hands for now? Would love to hear your thoughts below in the comments section!
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