If you would have asked me what my favourite trade was at the start of September, I would have answered, without hesitation, “Long USD/CAD”.
So why didn’t I trade the pair as it rose 750 pips in the month? It was an experience in frustration as I stayed too patient and missed several opportunities. On the one hand, I’m glad I stayed disciplined and didn’t chase. On the other, I’m upset that I missed a trade where I was 100% correct and had a high level of conviction.
What can I do now but head to the sidelines? When you miss a trade, you have to completely forget about it. I’m targeting 1.14 still but at 1.05 the risks are two way. Unless I can buy at 1.03, I’m not even going to think about this pair.
Entered AUD/USD at 1.0950 on 26 July. Exited July 26 at 1.1042. Result: +92 pips
Entered with no stop. Greatest open loss: 15 pips Greatest open gain: 110 pips
Sometimes a trade that is bought minutes or hours ahead of data looks whimsical but when it’s good, it’s often because it was set-up long beforehand.
I entered this trade because I became bullish Australian dollar after the RBA minutes on July 18 (my analysis here).
I became further convinced AUD/USD was going higher due to the breakout of the triple-top at 1.0789 on July 21.
I was waiting for a pullback but I knew that I wanted to be long into the decision. At the same time, it was risky to be holding USD positions because of debt ceiling talks and volatility in markets so I minimized those risks by buying hours before the decision on the bottom end of the recent range.
“We’re sure that the record of 1.1012 will fall,” we wrote.
What I should have known better: If I would have thought harder and prepared better, I would have realized what the break above resistance at 1.0789 was forecasting and been ready to buy on the pullback to 1.0800. I also left some pips on the table by covering perhaps too quickly. Eco data is always somewhat unpredictable, so I should have used a stop, even though I was watching the decision.
What I’m happy about: The fundamentals and technicals aligned and I jumped at the opportunity. What’s better than that?