this is the Forex Q&A podcast this is VP
professional Forex prop trader here in
the United States answering your user
submitted forex trading related
questions every Monday morning now if
you have a forex trading related
question on your mind don't ask me I
don't know you need to go to no-nonsense
Forex on YouTube and run a search in the
video section there is a very good
chance your question has already been
answered and if it is not you can always
go to the no-nonsense Forex discord
forum link will be provided down below
in the show notes and in the YouTube
description so we have a lot to talk
about here before we get into episode 78
s question first of all a programming
note you guys have probably figured this
out but I did say it that the material
was going to come to a complete stop at
the very end of 2019 I said that knowing
in the back of my mind that I was
probably going to want to add a few
things and I've already added those
things and it has pushed the schedule
into January 2020 so no this will not be
the last piece of media I put out it
will be the last podcast of 2019 of
course but we still have podcast we
still have videos yet to come and if I
think of anything that is pertinent in
the next two or three weeks I'm gonna
add that in as well I want to have
everything I want to kind of be all in
with the material once it finally
doesn't which now I would expect to be
the middle of January but then again who
knows it's good to be rigid and set hard
dates on things but it's also important
to be flexible when the time comes but
because this is the last podcast episode
of 2019 we need to talk about the word
of the year for 2020 if you guys don't
know there is one word that we all rally
around a four particular year and in the
year 2019 it was the word relentless and
I can tell you right now those of you
who were absolutely relentless in your
construction of your algorithms and your
testing and your trading are far ahead
of those who were not 2019 was an
extremely important time for those of
you who are following what we do on this
channel to be absolutely relentless in
everything you did
because now that we're entering into the
year 2020 there is going to be a new
word which is going to take you into
that next stage of your trading careers
now I did this at the beginning of 2019
I said can anybody guess what 2019 s
word is going to be not thinking that
anyone would even come close to it and
two people actually got it so what I
want you all to do for the year 2020 is
in the youtube comments section those of
you who are listening this on a podcast
player go to youtube and go down into
the comments section and say if you want
to if you want to take a guess at it say
the word is and then put a dash after it
and then let us know what you think it's
gonna be and if you get it right I will
announce your name and give you a little
bit of love on next week's podcast but I
will go on the record again and say I
don't think anybody is going to get it I
said it last year and I was wrong so
prove me wrong again this year and throw
a guess out there now what's the worst
that can happen
you become bougie internet-famous let's
have some fun with this so put them down
in the youtube comment section and start
your sentence by saying the word for
2020 is and then that way I'll know that
you're actually taking a guess and not
just typing out random words for no
reason and in other news you all might
remember I think it was episode 58 of
the podcast about the United States
dollar index I made a blog for that
episode and on the blog I said hey if
anybody out there can come up with a
dollar index to where each of the
currencies are actually weighted equally
I would be very interested in seeing
that and I think my traders would too
and we got a lot of responses please
don't send any more in I'm all full but
I didn't do anything with them I just
kind of let them sit there and I my mind
got on to something else and I just
forgot about them so what I'm going to
do is depends on when you're listening
to this podcast if you're listening to
it on the Monday it comes out I won't
have anything for you yet but I am
working on a way to put those files on
my wordpress blog because WordPress does
not accept MQL for files or ex4 files
but I went to discord and got some good
ideas so I'm gonna try those out first
and make sure people can actually view
those just so I don't have a hundred
people you know in the comment section
say I can't access these so give me a
few days and if you were on my Twitter
and if you are not you can go to the
very bottom of the show notes or the
YouTube description and get on my
Twitter and I will tweet out exactly
when I have those things up and working
because I honestly do think man
something like that could really be a
game-changer in our industry once all of
us have kind of had the chance to use it
and mess around with it and play with it
and add our own indicators on you know I
think some real damage could be done
because I don't use the dollar index
currently just because it's it's
weighted just completely weird and
nonsensical but the community stepped
forward and really gave us some cool
options and you will be seeing those
probably this week so stay tuned for
that
it is the Forex Q&A podcast and episode
78 s question is from Austin from
Pocatello Idaho and Austin asks what can
you tell me about swap rates in Forex
are there times of the week where I
should be cautious because I don't want
swaps eating up my account so let's go
ahead and play short answer long answer
like we used to do and short answer I'm
going to say you can pretty much ignore
them I have ignored them for 10 years
and I have no regrets doing that I
always feel like the chance at a
profitable trade far outweighs any of
those little ancillary fees that might
just pick away at my account along the
way but I will say this it's not
something I've paid attention to in a
while so I can't really speak to
eloquently on it an E as usual the
information out there on just the
Internet in general including YouTube is
really bad there are calculators you can
use there's plenty of those but there's
not a really good overview not a really
good tutorial I guess on what they are
how they affect your account and how
they differ depending on what
instruments you're trading so I wanted
to do that here but again this is not
something
really paid much attention to it all for
a while so I personally didn't think I
was the best person to talk about this
but I do affiliate for a handful of
brokers so I have connections in the
brokerage industry so I went and
bothered a few of them and they were
able to answer my questions quite easily
so I will share a lot of this
information with you now for those who
are interested and want to know so first
off let's start with the obvious
you know swaps are relative to how big
your trades actually are if you're
trading half a lot it's gonna be much
smaller than it will be if you're
trading five lots for example you know
it's all percentage based which is good
because this way now we're not forced to
trade less slots than we want to or more
lots than we want to just to avoid
higher rates it's all relative to how
much you're trading which is probably if
you're doing it right relative to how
much you actually have in your account
now in forex you actually have currency
swaps which are based on interest rates
to where if you're trading CFDs which
applies to pretty much everything else
we've been talking about you have
rollover instead which is similar but a
little bit different rollovers are just
kind of more of a readjustment in the
market and if you were in the market
beforehand you have to pay or collect
based on those readjustments but
percentage-wise they're fairly close
you're gonna notice that
but the question itself was on forex
trading at the end of the day this is a
forex trading podcast so I'll focus on
those more than I will roll over but
just know for rollover two affects you
about the same maybe a bit less
depending on what you're trading but for
currencies for forex this was a lot
bigger deal years ago when you had much
more distance between the currencies
with the higher interest rates compared
to the ones with the lower interest
rates as far as the eight majors that we
trade here I mean as I'm shooting this
podcast right now you have at on the
high end 1.75 percent interest rates and
on the low end negative 0.75 interest
rates that's nothing
like I don't even know why I'm talking
about this
now it's so irrelevant it was so much
more relevant before and I even ignored
it back then but back then there was a
lot more distance between the high and
the low and you would even have a lot of
people doing something called a carry
trade to where they would just trade at
the high against the low so in this case
I think it was the Aussie yen and they
would go long and just ride that nice
little interest rate separation and just
hope it went long and a lot of times it
did so they were they were getting the
best of both worlds
but even in that situation remember this
and yes Australian traders I do call it
the Aussie and not the Aussie I'm aware
of it it's foreign dialect get over it
but let's just play pretend and say that
the Aussie was at a 4% interest rate and
the yen was at a zero if you went long
on that and let's just say the pair
didn't go anywhere
you weren't really collecting 4% you
were collecting a bit less than that
because if it was at 4% you run the risk
of people coming in and running
arbitrage so in a case like that it's
gonna be a bit less than 4% but this was
a much wider gap and if you were going
long on that pair you were getting
positive swaps every single day but if
you were going negative if you were
shorting the Aussie yen you were getting
penalized every single day and then
three times over
on Wednesdays so yes for what it's worth
this is a thing you will get dinged
three times as much on Wednesdays as you
will any other day of the week that's
all it's gonna be three times positive
you're getting a positive rate but those
happen a lot more rarely these days and
I will explain why in a moment
but even in situations where going long
was to your benefit from a swap
standpoint and going short was to your
detriment from a swap standpoint I still
felt very strongly I stand by this today
that it is always in your best interest
to never allow swap rates to determine
whether you go long or short on anything
just trade your system if you're going
the right way
even if you have to eat negative swap
all along the way and you have your
trade open for a long time
you're gonna lose a little bit of money
yes but you're still gonna come out
positive in the end often very much so
and you would hate to have something
like negative swap rates prevent you
from getting in trades which can be very
profitable to your bottom line and if it
didn't really apply much then when the
gap was much bigger
it certainly doesn't apply now and now
that that gap is much smaller because
now those negative rates you have to pay
are also smaller but also because these
interest rates are now so bunched up
together a lot of times you're gonna
render those situations because you
don't get the full positive swap you
might end up paying negative swap rates
regardless of which way you go if you
want to trade my favorite pair on the
planet the Aussie Kiwi now you are
likely going to be paying a negative
swap regardless of which way you go
because those interest rates are now
very close together currently I have
absolutely zero 4x trades open or I
would actually be able to look down and
give you a little more on this
numerically but just understand the
basics here that's really all you have
to know so overall it's inevitable the
good thing is nowadays it doesn't affect
us the negative ones at least don't as
much as they did in the past and you can
be like me or pretty much ignore it or
you can just kind of monitor it along
the way and just see how much it is
eating into your account and then kind
of make a decision after a couple weeks
or so what I was also told is once you
start getting into about a month so if
you've had a trade open for a month
chances are it's a damn good trade if
you're trading off the daily chart like
we do here but right at the month mark I
was told things can get a little bit out
of hand so you might want to monitor the
situation a bit closer but what this
also says is that the whole idea of
swaps in general I have a feeling were
really meant to be of concern to forex
investors not forex traders like us all
this education about swaps you got at
the start and all of the material you
probably see now is a lot
more relevant to forex investors than
forex traders just like I said about
fundamental analysis traders can and
should avoid it as much as humanly
possible investors unfortunately cannot
afford to ignore it and I honestly feel
like swaps fall into this category as
well but this was a question I got a lot
over email back when I had SVP which I
don't now stop asking me questions and
there's a question I would get a lot on
the youtube comment section as well and
I'm not gonna sit there and just answer
these every time they pop up so I wanted
to definitely have a podcast dedicated
to just this to kind of ease your mind a
little bit
I feel like experienced traders have
already figured this out to where
they've been trading and they've been
watching these things and even though it
sucks because it's eating into your
account you kind of realized at the end
of the day it doesn't eat into your
account that much I've even had years
where I ran the numbers and actually
came out a little bit ahead but for the
most part you are gonna have to pay a
bit of a fee it's pretty much just the
cost of doing business it's kind of the
way I see it kind of like if you're in a
country where you would have to bribe a
police officer if you want to get from
point A to point B it's like who cares
just just how it is
it's the cost of doing business what do
you go do instead you know not get from
point A to point B you sit there and
complain about it or just pay the man
and go about your day so rest easy
traders don't let swaps affect your
trading unless for some reason interest
rates start getting out of hand and by
then I will come back and address you a
second time but I don't think that's
happening anytime soon but what is
happening soon is the year 2020 so
saddle up traders this is going to be a
very telling year for many of you and
just because 2019 is coming to a close
don't think you can just not be
relentless that is something you need to
carry over into everything you do all of
the time that is non-negotiable but
thankfully you understand the benefits
of taking that approach to your trading
and you are starting to see what lies at
the other side so get there however you
can but always be relentless do not let
this momentum stop but traitors I do
hope to
was a very exciting year for you and I
hope this podcast had a lot to do with
it and I want you to carry this momentum
into 2020 and never stop if you stop
everybody else is going to pass you up
and you don't want that so go get it