Millionaire TradersQ: How long do you usually keep your positions open?
A: On a short-term basis. I have tried to day trade. Day trade has
two meanings to me. The first is that I can earn a large amount
of money if the move happens in one day, so I would pocket that.
For example, if I am long dollars and the U.S. dollar rallied 300
points, I would definitely pocket the money because 300 points is
far beyond what I may have considered for a daily move. So I would
take it as a day trade and bank the money. On the other hand, if
I was long dollars and the dollar is not able rally, and I have some
small profits like 10 or 20 pips, I may pocket that money as well.
The thing is, when I go into the market and enter into a position,
I will not think about whether this will be a day trade. To determine
how long I will hold a position, I look at the charts to see how
long previous trends have lasted and how long the current trend
has been in the works. In these situations, I would be perfectly
comfortable holding a position for as long as a month. When I
hold positions for a month, one of the most important things that
I will always consider is interest. There was a time when I felt
that U.S. interest rates were very high. So I went long the U.S.
dollar against the Swiss franc and Japanese yen because, if I am
holding the position for a month, I will know that at least I will
earn the interest. If I felt that the outlook for the U.S. dollar is
weak, I would short the dollar against the British pound because
at the time I would earn interest going long pounds against the
dollar. So I will pick a direction where the interest is favorable to
me. This is important for longer trades because the amount can be
significant. The interest that you earn is increased by the usage of
leverage so it can be a large amount. This is exceptionally important
for medium-term traders. For short-term traders, interest is not
important because there is only a limit to how much interest you
would end up paying out.
Q: How long did it take you to figure out the importance of
interest?
A: Not too long after I started trading. The great thing about
the FX market is that you have a choice. I can pick to earn or pay