Positional Trading Strategies for Long Term Trading Strategy

-

 Trading with a strategy in the stock market will not only improve your chances of success but also minimise the impact of potential risks. For short-term or intraday trading, you can use various types of trading strategies, but positional trading, buying any stock on the basis of fundamental analysis, would be not enough. Here you need to follow the right trading strategy.

Positional trading is like holding your trade position for more than one day, and that could be a few days to a week or a month. Because of this, positional trading is also known as long-term trading that involves the trading activities while holding the stocks in your demat account. If you are interested in such trades, we have brought here a long-term trading strategy suitable for positional trading.

Positional Trading Strategies for Long Term Trading Strategy

Top 3 Positional Trading Strategies

The main motive of exploring such strategies is finding the stock trading at lower levels and likely to bounce back in the upward direction. This trend reversal can happen anytime in upcoming trading sessions, giving you an opportunity to enter and hold your position for a few days. To find such stocks, you can trade with the following positional trading strategies. 

Support and Resistance Trading Strategy

This is one of the most popular trading strategies, allowing you to take advantage of price taking support at the lower end and resistance at the upper end. Support is the point, or you can say the levels where buyers dominate the sellers, stopping the price further down.

On the other hand, resistance is the upper point where sellers overtake buyers, resulting putting pressure on the stock to stop moving further in the upward direction. And these support and resistance points can be used as trading opportunities for positional traders.

When stock is trading around support levels, you can buy the stock that can move back in the upward direction, giving the opportunity to earn profits from such moves. And to find out the more precise buying levels, you need to use certain technical indicators like drawing a trend line, Fibonacci retracement or moving averages to enter at the right levels.

Breakout Trading Strategy

This is another useful trading strategy that can be used for positional trading. In breakout strategy, when a stock is trading in a range or consolidating coming out from this trajectory providing a trading opportunity for the traders when such a breakout happens.

In fact, the breakout strategy can be applied when support and resistance are broken by the price. The stock price takes a resistance when pushed by buyers with volume of trades breaking such a resistance zone. You can enter into such stocks showing substantial moves, but make sure there is no false signal of breakout, as it is well-supported by a significant volume of trades.

Similarly, you can enter in short position when a stock falls below the support levels, which is also called a breakdown, that occurs when sellers overtake the buyers, pushing the stock price to break the support levels. However, in positional trading, shortselling could be risky if you don't have the physical shares of that company in the same quantity, and don't forget to trade with a stop loss.

Pullback and Retracement Trading Strategy

When a stock is trading with an upward trend, it does not constantly move up, but it takes corrections or after a long rally, comes down before pulling back to an upward trend. This is called a retracement, allowing an opportunity to buy the stocks on such dips and take advantage of such a long-term uptrend.

Positional traders usually keep watching such a retracement, and when the price corrects and takes support, they tend to buy the stocks when it pulls back towards the upward trend. The level of correction or ratio, how much or where the stock is likely to correct and pull back, can be calculated on the basis of the ratio.

However, sometimes such a retracement is misinterpreted as a trend reversal that is different and can be identified with the help of various tools and indicators. Hence, the best way to recognise such pullback retracement is to use the Fibonacci retracement to see the different retracement levels as per the uptrend movement of the stock and the possibility of corrections.

Comments

Post a Comment

Popular posts from this blog

How to Deploy Strategy in Algo Test with Moneysukh Trade Radar

-
Image
In Algo Trading software like Algo Test or Trade Radar, you can choose from existing strategies or create your own strategy as per your expectations from the market. However, choosing or creating the strategy would be not enough to make it successful. The right deployment is equally important to make your strategy effective and work efficiently. To execute your option strategy while trading through Algo trading you need the right approach to deploy the strategy in your  Algo trading  software. Here we are going to discuss, how you deploy your option strategy efficiently with strategy deployment features with stepwise guidance to deploy the strategy through your broker’s trading account. Key Requirements to Deploy Strategy To deploy the strategy you need certain details to log into your trading account etc. Let's find out what are other details required to deploy a strategy in Algo. Algo Account to Login First of all, you need a trading account through which you can get access ...
Read more

IPO allotment for retail: how are shares allotted for the retail category

-
Image
  IPO allotment refers to the process of allocating shares to investors who have applied for them during an initial public offering (IPO). It is a crucial step in the IPO process as it determines how many shares each investor will receive based on various factors such as demand, availability, and regulatory requirements. The IPO allotment is typically conducted by the underwriters or syndicate members, who carefully assess the applications and allocate shares accordingly.   The importance of IPO allotment for retail investors The IPO allotment is particularly important for retail investors, as it allows them to participate in the offering and potentially benefit from the company's growth. It provides an opportunity for individual investors to own a stake in a publicly traded company and potentially generate returns on their investment. Additionally, the fair and transparent allocation process ensures that all investors, including retail investors, have an equal chance of rece...
Read more

Best Technical Indicators for Long Term or Positional Trading

-
Image
  In stock market, technical indicators are mainly used for  intraday trading  or  options trading , but they can be used to enter into positional trades or for long-term trading. Fundamental analysis is considered mainly for long-term investment but many investors still use technical analysis or technical indicators to buy a stock at the lowest price or at the best point to get the maximum returns. In technical analysis, you can find multiple  technical indicators  available that you can use for day trading or short-term trading. But for positional trading, only a few indicators are more useful and can give you a more reliable indication to enter or exit from the positional-based trade positions. So, right here we are going to discuss about the best indicators for positional trading or you can sue for long-term trading. Best Indicators for Positional Trading: Exponential Moving Average Exponential Moving Averages (EMV) is one the most popular technical ind...
Read more