A Tale of Two Traders!

Two traders want to climb their way to success two different ways. Mr. Daytrader has a goal of 100 pips, and sets out to place 10 trades of 10 pips apiece in order to accomplish that goal. Mr. Swing Trader has the very same goal of 100 pips, yet sets out to do it in just two trades of 50 pips each.

They both trade the exact same pair: EUR/USDTheir spreads average 2.5 pips (or $2.50 per standard mini lot traded). Both traders reach their goal in this instance.

So what’s the difference?Mr. Daytrader had to incur 10 spread costs (25 pips or $25) in order to make 100 pips or $100. Meanwhile, Mr. Swing Trader paid a spread twice (5 pips or $5) for his trading costs in order to reach his 100 pip goal.

Wonder which trader has the better odds of success over the next year? Mr. Swing Trader…why? The lower your costs before you get into the profit, the more likely you are to actually “make that profit”.

So, I know it seems that everyone “wants” to be a day trader…but maybe they “need” to start off as a Swing Trader first. I hope you’ve enjoyed the “Tale of Two Traders”.