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EP72: Benefits and Risks of Swing Trading vs Day Trading
In this episode of Truth About FX, Walter digs into the advantages and disadvantages between swing trading and day trading. According to him, the success of your trades — and whether you use a broker or not — depends on the movement of the market and when your trades are placed and executed.
You will also find out here about two groups — and which one you might belong — and more about the human psychology that affects your biases.
Download (Duration: 06:22 / 7.28 MB)
In This Episode:
00:35 – face the fear
01:38 – market maker
03:35 – blindsided
05:29 – get addicted
Tweetables:
Your set-up and rules should depend on the timeframe [Click To Tweet].
Do you reduce your position size? [Click To Tweet].
Risk is what makes or breaks any system. [Click To Tweet].
Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.
Hugh: Hi, Walter. Somebody contacted me, viewed my blog, and they were asking you to explain the benefits and risk of swing trading vs day trading. Their second question is, how do you face the fear of currency meltdown?
Like you mentioned, like Francogeddon or Brexit or something like that. I guess, two questions.
Walter: Yeah, right. Great questions, by the way, these are excellent. Here is the way to look at this. If your broker is matching up orders to the true forex market so, you have a retail forex broker and they are matching up orders to the real market like FXCM or whatever.
If you’ve got a broker that claims STP or ECN and they are telling you, “Look, we’re legit,” and all that, you must know — and everyone should know now based on Francogeddon — that the weakness in that model is if the market moves extremely fast and their system cannot execute trades quick enough from their platform to the interbank market which is, essentially, what caught FXCM. Then, you must know that that is a risk.
I am not suggesting — like if you are a scalper — I am not suggesting that you should go and trade with the market maker but know that the market maker has the advantage here because the market maker does not have that risk. In fact, if you look at some of the market makers on Francogeddon, what they’ll you is that they made money that day.
FXCM goes out in business. Essentially, they are liquid and then the loan sharks came in and save them but, that is the difference between the market maker and a broker who’s trying to be honest and say, “Look, everyone’s in group A” — because most of the market makers they have group A and group B.
Group A are the traders that make money and the group B are the traders that do not make money. Everyone gets put in group B until proven otherwise, basically. They do not really care that much about you if you are in group B.
If you are group A, they do and they will edge you and make sure that you do not send them bankrupt. The thing that I want to get clear here is that things lik...
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By Walter Peters (FXJake) and Hugh Kimura (Trading Heroes)In this episode of Truth About FX, Walter digs into the advantages and disadvantages between swing trading and day trading. According to him, the success of your trades — and whether you use a broker or not — depends on the movement of the market and when your trades are placed and executed.
You will also find out here about two groups — and which one you might belong — and more about the human psychology that affects your biases.
Download (Duration: 06:22 / 7.28 MB)
In This Episode:
00:35 – face the fear
01:38 – market maker
03:35 – blindsided
05:29 – get addicted
Tweetables:
Your set-up and rules should depend on the timeframe [Click To Tweet].
Do you reduce your position size? [Click To Tweet].
Risk is what makes or breaks any system. [Click To Tweet].
Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.
Hugh: Hi, Walter. Somebody contacted me, viewed my blog, and they were asking you to explain the benefits and risk of swing trading vs day trading. Their second question is, how do you face the fear of currency meltdown?
Like you mentioned, like Francogeddon or Brexit or something like that. I guess, two questions.
Walter: Yeah, right. Great questions, by the way, these are excellent. Here is the way to look at this. If your broker is matching up orders to the true forex market so, you have a retail forex broker and they are matching up orders to the real market like FXCM or whatever.
If you’ve got a broker that claims STP or ECN and they are telling you, “Look, we’re legit,” and all that, you must know — and everyone should know now based on Francogeddon — that the weakness in that model is if the market moves extremely fast and their system cannot execute trades quick enough from their platform to the interbank market which is, essentially, what caught FXCM. Then, you must know that that is a risk.
I am not suggesting — like if you are a scalper — I am not suggesting that you should go and trade with the market maker but know that the market maker has the advantage here because the market maker does not have that risk. In fact, if you look at some of the market makers on Francogeddon, what they’ll you is that they made money that day.
FXCM goes out in business. Essentially, they are liquid and then the loan sharks came in and save them but, that is the difference between the market maker and a broker who’s trying to be honest and say, “Look, everyone’s in group A” — because most of the market makers they have group A and group B.
Group A are the traders that make money and the group B are the traders that do not make money. Everyone gets put in group B until proven otherwise, basically. They do not really care that much about you if you are in group B.
If you are group A, they do and they will edge you and make sure that you do not send them bankrupt. The thing that I want to get clear here is that things lik...