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After getting whacked lower thanks to the latest Fed meeting, I decided to lock in some profits on my USD/CAD short.

Top of Range to Hold on USD/CAD?

USD/CAD 4-Hour Forex Chart
USD/CAD 4-Hour Forex Chart

Back at the end of November, I combined the themes of rising global trade optimism, the BOC unlikely to cut rates, and the strong resistance area to short USD/CAD at market (1.3270) with 1.00% max risk. And so far, that trade has worked out well, especially today after the Fed signals that rate hikes will not likely come until we see a persistent rise in inflation, a situation that doesn’t seem to be likely any time soon. This brought the market down quickly from around 1.3233 to finding support around 1.3160 at the moment.

It’s a solid gain but no where near my max profit target, but with a heavy calendar ahead to close out the rest of the month for both the U.S. and Canada, I decided to lock in some profits. My thought is that with volatility dropping and trades taking longer to play out than ever before, it’s probably a good idea to lock in something before a surprise news story shifts sentiment. With that thought I closed half position manually at market (1.3172). Rolled stop lower to 1.3360. 

This basically drops my risk down from a max 1.00% of my account originally to approximately 0.03%.  Of course, this adjustment also reduces my max gain at my target (1.3055) from +1.34% to +0.98%, but the trade off is that I basically have a near risk-free trade and with wiggle room in case USD/CAD bulls take back control again.

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.  And with a profit of +0.31% locked in and the ability to roll my stops further, my max loss will be very limited even with a bigger position.

That’s it for now, so I’ll just sit back and wait to see what the slew of upcoming U.S. & Canadian economic data gives me, as well as the U.S.-China trade updates, including this weekend’s potential rise or delay in China tariffs.

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.