A swing trade is when you sell a currency to buy dollars at a higher price. A swing trade is also known as a ‘price swing,’ because it is done in a price range and is based on the price of goods and services, such as a currency’s exchange rate.
A swing trade is also sometimes referred to as a ‘flash stop’. Such a stop is the only way to prevent your currency from being withdrawn at the last moment. A swing trade is also called a “bets,” because you buy to speculate on the chance your currency may fall to a higher price in the future.
The dollar has been known to trade at several points in the middle of its cycle from the mid-1980s through the early 2000s. It has followed a very wide range of prices between those times, ranging from the high of $0.60 on June 20, 1987 to lows of $0.45, $0.60 and $0.70 on November 8, 1990 in the first and second halves of the cycle, the low of its most recent cycle on November 16, 2004 to the high of $1.00 to November 16, 2010.
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Why, then, do people still trade dollars?
The simple answer is that people have many different reasons to buy and sell dollars, most of them related to the short-term performance of the U.S. dollar, and not to any specific event.
“People who trade dollars for foreign currency have a number of important reasons for wanting to buy and sell dollars,” said David Giambrone, a currency trader and professor at the University of Illinois and former professor at the University of San Diego. “For some, this is a way of making more money — if they have bought dollar bills at the right time, and are confident they have the right amount of dollars, perhaps they can sell them,” Giambrone said.
Markets and currency markets tend to follow cycles of a few decades with an average of about 10 or 15 years, he said.
What are the benefits of a dollar for foreign currency trading?
When traders buy a dollar, they receive 1.2 cents of the currency they trade in, but only 0.07 cents back, according to a U.S. currency dealer.
If the trader wants to sell at a lower dollar rate, he pays a return of about 1.3 cents.
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