I went long on the AUDUSD last Friday. This trade began well. A pinbar had formed at a support level and proceeded towards my take-profit. As it reached halfway towards my TP yesterday, the RBA released its latest decision on the AUD cash rate and chose to keep it on hold for now.
This was what the market expected and the short-term bull run should have continued. Then the RBA tried to be cute and mentioned that there was a high likelihood of a cash rate decrease next month. That pretty much encouraged traders to discount the AUD today. I guess the RBA is trying to decrease the AUD and trigger some sparks in the Australian economy without having to move the cash rate. Clever, but does nothing for me.
Fundamentals prevailed over technicals, price fell and my stop loss was hit.
I've spoken with other price action traders and the consensus is not to trade during big news.
After mulling over this, I've arrived at the following lessons. During a big news day, if I have a trade open and:
* Price is >50% towards TP, close the trade and take profit.
Rationale: I'm not far from my TP. If news is in my favour, I won't receive much benefit. Might as well take profit and run.
* Price is <50% towards TP but above breakeven, move my stop loss to breakeven.
Riationale: If news is in my favour, it'll provide the needed momentum to cover the distance to my TP target. If news goes against me, my breakeven SL will ensure I lost nothing.
* Price is <50% towards SL and below entry, move SL up by 25%
Rationale: If news goes against me, I won't lose as much. However, by tightening my SL by only 25%, I can still give my trade some space to breath and a chance for technicals to prevail.
* Price is >50% towards SL, leave trade as is.
Rationale: This is a similar reason as above. There's still enough space for the trade to breath but if the news is bad, I won't lose much. On the otherhand, if the news is good, a trade on the verge of losing will become a winner.