Page 88 - Ultimate Guide to Currency Trading

The trade is logical, but sometimes the market isn't. News happens fast. There are any
number of things that can happen to make the market suddenly reverse course and send the world
running for cover and out of risky assets. It might be a snow storm on the eastern part of the United
States (New York traders would stay home and not be at their trading desks) or a negative
development in a euro-bloc country. Either way, there is a chance that some news could happen that
would send your well-thought out long AUD/USD trade into a spiral, as the USD would gain since it is
considered a safe-haven currency.

In fact, you could use the market's reaction to increase your long holding of the AUD/USD at
an even cheaper rate than before. Reading the news helps you to keep on top of trades. It also allows
you to keep on top of opportunity: the reaction is most likely a temporary setback in the world's risk
appetite. It is also most likely that the Reserve Bank of Australia will still raise rates that 0.25 percent
since they will be looking at the long term (and the news often looks at the ultrashort term).

One of the best things an FX trader can do is learn how to walk away from her trading
desk. If well-thought out, automated take-profit points and stops are built into the
ALERT software, and then just let the market and the computer do the work. Do not become
impatient or worried! Your trading system will do the work for you.

You could hold on to your original observations. Watching the news could alert you to a
chance to add another position to your AUD portfolio. You could use a risk management idea to break
your additional position into three entry points over the next two or three days. You could set your
exit points at a nice 1 percent (average) price movement to the upside. At this point, it would be best
to walk away from your trading platform for a few days. Keep checking the price of the AUD/USD by
looking at the FXA on your iPhone or iPad during the next several days to keep abreast of the
developing price. Let the computer exit out of your long AUD/USD trades automatically when the time
comes. The time will come. Risky assets will be back on people's minds as something to have in their
portfolios. The AUD will come back. It always does!