How to Trade on China's Slowing Economy
China's red hot economy is cooling, and this strategist has a way to play it.
Remember when China's economy was hotter than hot? Not so much right now, and Todd Gordon, co-head of research and trading at Aspen Trading Group, has a way to play that using currencies.
The Shanghai A shares index and the Australian dollar have been trading in tandem for months now. And as Chinese inflation has slowed and worries have mounted about the property sector there, Australia - a major trading partner - has felt the effects, and the Aussie has slipped.
"China is leading the way down, so a great corollary to play that is the Australian dollar," Gordon told CNBC's Melissa Lee.
Gordon recommends selling the Australian dollar on a bounce, putting on half your position at 0.9700 and the next half at 0.9800.
He wants to set a stop at 0.9985 and take profits at 0.9200.
"I think this is something more than cyclical. I think this is a structural change," Gordon says.
"Risk aversion is here."
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Learn more: The essential vocabulary for currency trading is on Key Currency Terms. Top currency strategies are broken down for you in Currency Class.
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