Question to Swing Traders.

[Arya Stark]

As a swing trader, I always trade in the direction of positive swaps (unless the negative swap is smaller than 7 usd per lot). On the other hand, this increases the risk of price turning against me, if sudden risk aversion happens. How do you solve this? I mean, we can trade in both directions equally, but if a trade runs for days or even weeks, negative swaps can erase most of the profit, or make the loss much bigger. Some negative swaps reach 20 usd, and its x3 on Wednesday to Thursday rollover. And which pairs have the largest negative swaps? Yes, exactly the riskiest in term of risk aversion: Highest yielding against the Safe Haven. So if we want to save on swaps, we buy the highest yielding against the lowest yielding, and those pairs turn against us the most, in case of risk-off.

 

[Enivid]

Yes, taking swing trades that are swap-negative can be psychologically difficult sometimes, but it's a necessity for a swing trader because markets sometimes do switch to risk-off mode. Normally, I avoid negative swaps, but if I see an opportunity which is worth much more in potential profit than in potential negative rollover, I take that. Yes, sometimes it gets nasty due to a slow moving market - then it's time to eat the loss and close the trade.

 

[Zerologic]

Carry trade strategy is indeed very challenging when the price trend direction doesn't match expectations. Negative swaps can reduce our account balance day by day. If the daily movement doesn't match expectations, I usually close positions on pairs with high negative swaps, even though I haven't hit my stop-loss yet.