Position trading and roll-over

Trading Discussion
1

Hello babypips!

In recent weeks I came to realize that I’m not a scalper nor a short-term swing trader. At best I’m a long-term swing trader, but ultimately I’m more of a position trader. I like trading the daily charts because I can check my charts before bed each night and conduct analysis on the weekly charts every weekend. I did some backtesting and realized that my trades would generally have to be held for a minimum of a week, but could last up to several months.

Roll-over is a bit of a concern, however. I trade with FXCM, and roll-over for a short position on AUDUSD is currently -$0.5 if I’m not mistaken. Seeing as I trade micro lots (0.01 standard lots), $0.5 is the equivalent of 5 pips. If I were to hold onto a trade for 60 days, roll-over alone would cost me 300 pips. If I were to make 900 pips during those 60 days, roll-over would eat 1/3 of my profits, which is not very encouraging! Is there any way around this? Should I just look to trade pairs that have low roll-over fees?

Are there any position traders here on Babypips? If so, then please leave a comment with your words of wisdom!

2

Dear Nikz,

welcome to the forums.

As you can see from my various Kiwi threads, I am a NZD bear (grrrrrrraaaaaarrrrr!)

so I am all too familiar with negative rollover… However, with the kind of moves I

have traded on the GBP/NZD, I could not care less (okay, I do, but…) about negative

rollover, if I compared this to, say, going long on any Kiwi pair, as the Kiwi is in negative

trending almost against every pair known to Earth - I exaggerate, of course.

I then think: which is the pair closest to the NZD in terms of interest rate? Why, the Aussie,

of course! However, while the Pound was shooting up 3,000 pips since the beginning of the year,

the Aussie-Kiwi was not as mobile… In other words, you have to balance the number of pips

gained versus the amount of time it takes to achieve that: do you want to make 900 pips in

a week, and pay one third in rollover, or pay less rollover but wait twice, three times, four times

as long to achieve that?

If you want positive rollover, maybe shorting the Euro against the Pound might be a better option,

for example…

Do you know what I am saying?

I know that you are interested in the Aud/Usd specifically, but I was just giving you the Kiwi example

because it has similar implications…

I cannot look at the charts because, like you, I am with FXCM and they are always closed for maintenance

on Saturdays :slight_smile:

3

I think figuring out what type of trader you are is a very important step to success in this market.