One question for Swing Traders out there

Discussion in 'Strategy Development' started by Remiraz, Jul 1, 2005.

  1. Remiraz

    Remiraz

    To swing trade is to hold positions for 1-3 days or more. Any less than 1 day would be day trade. (well duh XD)

    Now, every few days there are news releases like NFP, GDP, Interest Rate adjustments etc etc which will cause markets to jump. (FX gap 100-200 pips, ES jump few pts?)

    Won't it be rather dangerous to hold trades during those times? If say you trade EuroFX with 50-100 pips S/L...if your trade is down 20 pips already, a news spike of 100 pips would blow past your stop doesn't it?
     
  2. =====================

    Dangerous???????

    No not really compared to accidents on highway;
    and my comments apply to liquid stocks /liquid derivatives,
    with reasonable position size.

    As you may notice as the years go by, ''jumps'' gaps, suprises , trends tend to be directional.


    :cool:

    Wisdom is the principal thing
     
  3. sure ideally you want some profit cushion going into the event , if you are sitting on a loss and would not enter the same trade at that point - i.e. charts don't look good- you may want to liquidate half the position .
     
  4. I would say no.

    From a fundamental perspective, you of course take into account the economic data. When the data turns out to be not what you expected, your tradesetup fails and you are stopped out.

    From a technical perspective, if you watch the impact of economic numbers, you will often notice the effect depends on technicals. Sometimes NFP turns out worse than expected, Euro spikes up, but comes down quickly, only to end up 100 pips lower than before the NFP announcement. Or the effect of economic numbers is moderated by support/resistance levels. What I'm basically saying is that the effect of economic numbers is often bounded by technical levels (for example trendlines). If the number stops out your technical based trade, it's often because the technical setup was no good. :)

    Just don't put your stops to tight, to allow for some leeway.