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Decided to adjust my plan to lock in profit on AUD/CHF and continue to play the strong downside momentum.

Short-term Downtrend in AUD/CHF?

AUD/CHF 1-Hour Forex Chart
AUD/CHF 1-Hour Forex Chart

Earlier in the week, I decided to short AUD/CHF to play the recent risk aversion environment sparked by the rapidly spreading Coronavirus outbreak (Coronavirus declared global health emergency by WHO).

Unfortunately for many, the rate of infection hasn’t slowed down, prompting more risk  aversion behavior since posting my idea. Fortunately, my orders to short AUD/CHF at 0.6595 was triggered before traders to the pair lower back to the recent swing low.

Given that we probably haven’t seen the peak yet of what kind of reach and damage this outbreak will do, I wanna stay short this pair.  But given we’re so close to my profit target, I decided to tweak my trade a bit to lock in a profit and potentially increase my max potential gain if this run is not over. Here’s what I did:

  • Closed 70% of the position manually at 0.6519. 
  • Rolled stop lower to 0.6565 (one daily ATR from adjustment price). 
  • Rolled target lower to 0.6455, around two daily ATR away. 

With this adjustment, I have locked in a 82% return-on-risk, or 0.41% on my original 0.50% risk, if my new stop is triggered. My max gain went from 1.12:1 R:R to 1.20 R:R, which isn’t a much of an improvement, but remember that I have a no-risk trade on so something had to give. I also have the option of adding back to this trade in either case of a move higher or lower, so the potential gain can always increase.

That’s it for now, so I’ll just sit back and wait to see what the market gives me and if it makes sense to add to this position or close it down quickly.

Stay tuned for updates and 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.

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.