First, a swing trade: The main purpose of the market is to find out what your next trade will be. When you enter the market, you are betting that one of two things will happen: your current position will be moved by the price of your original position; or it will move by the opposite.
The second thing you are betting is your position. When your position was created, it was a relatively long position in dollars and gold. When the price changes, one side of your position might have a higher price and the other side may fall. To be more precise, when the price changes, your position will have increased and decreased in value.
Let’s illustrate the process a little. Suppose you want to take a position in gold. You enter the market and the price is $1,800/oz. In this case, you are buying gold for $1,600/oz (or $1,200/oz with the silver spot). This gives you a 100% swing rate. The price of gold decreases 10% and your position increases 5%.
What are swing trading fees?
There are two ways to structure a swing trade: market buy and market sell. You place your order at the price you want the current position to trade. The next day, you will get a payout based on the order size. The next day, you will see the market price at that final price, then get the payout. This works like a P&L plan. A market buy would involve trading two orders at the price you expect the current position to trade for; as well as two orders at the price that the position needs to sell for. A market sell would involve trading three orders at the price you expect the current position to trade for; and as well, three orders at the price that the position should trade at.
Now that we understand swing trading, let’s get into it!
What is a buy order?
Most of your time will be spent in your buy order, which you place at $0.25/oz. This means that 50% of your daily fee is paid right now.
When you enter the market, this order creates a trade in gold for $0.25/oz, plus 50 cents in transaction costs. To make things simple, the market will charge you $1,000 to place this order, or $25 if you prefer to wait for a new market order. (We will cover the actual transaction costs later).
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