If you’re a swing trader, which of the following will most probably not be one of your problems?
Correct Answer:
The need to have a bigger account to ride longer term swings
Your Answer:
High transaction costs
INCORRECT
Explanation:
See the explanation in the School of Pipsology
This is another mistake. I think the question creator forgot that they put a NOT in the question.
The answers were:
[ul]
[li]High transaction costs
[/li][li]The need to have a bigger account to ride longer term swings
[/li][li]Overnight risk
[/li][/ul]
Overnight risk, we can all agree [B]is[/B] a risk of swing trading, so we’ll cross that out.
That leaves
[ul]
[li]High transaction costs
[/li][li]Need for a bigger account
[/li][/ul]
What you consider a ‘high’ rate of transaction costs is obviously relative, but short-term intraday trading will have the highest transaction costs, and allow for the smallest account since trades will be closed intraday.
If you are swing trader, you’re clearly trading on a longer timeframe than short-term traders, so your account will need to be large enough to handle overnight risk, and swings that last longer than a day.
I know, Lexys, you can also have a ‘high’ transaction rate as a swing trader, if you enter lots of trades, or if you think holding a trade for less than a week is a high rate, but those would apply to all the timeframes of trading. At least we can surely agree this question is terribly ambiguous, bordering on confusing. It needs to be edited, specifically by making it more specific to swing-trading.
