Most traders rush to find a stock that is moving to trade without considering whether the price action is right for their particular trading style. This series we are going to examine the most popular trading styles and how to select the right price patterns for the best stocks for your trading style.
Trading Styles are not strategies. A Trading Style defines what strategies you can use successfully based on the type of price action, entry signal, hold time, etc that your trading style should use.
Today we are going to look at a few charts that are ideal for Position Style Trading.
Position Style Trading is a trading style that is not as well known but is the most adaptable and easiest of the short term trading styles to learn. It requires less capital and time.
If you are working full time or even part time and are trying to learn to trade, then consider the Position Style Trade as it is perfect for busy people who want to trade but don’t have the time to be in front of their computer all day long every day.
What is great about Position Trading is that you can study charts once a week and make great profits over time.
The hold time for a position trade is a couple of weeks to the longest about 3 months or so.
Position Trading is excellent when the market turns sideways and is sluggish or slower paced where swing trading would whipsaw you out of a trade, position trading allows you to hold through the minor ups and downs of the sideways market.
IMGN is a classic platform price action that is ideal for position trading. It has several things that are indicating this stock is poised to move suddenly.
The compression pattern of the candles is indicative of a building of underlying strength and buyers moving in.
Prior to the sudden long white candle TT Flow of Funds exposed a heavy surge of funds moving into the stock quietly.
Volume has an early surge during the consolidation.
And RSI is rising even before price moves up.
Chart 1
A weekly chart shows that IMGN is just completing a long term trend bottom and is exposing quiet accumulation by larger funds. It has plenty of upside point potential for a position trade.
Chart 2 The goal of a position style trade is to enter a platform or consolidation pattern prior to the move up, hold the stock as it trends up and exit prior to a strong resistance level where there is risk of a correction.
Platforms form during value-oriented markets. Platforms tend to follow earnings report timelines. Many busy traders find this trading style highly lucrative with a very small time commitment.
As always:
Trade wisely,
Martha Stokes, C.M.T.
Member of Market Technicians Association
Master Rated Technical Analyst: Decisions Unlimited, Inc.
Instructor and Developer of TechniTrader® Stock Market Courses
http://technitrader.com
MetaStock Partner
(c)2011 Decisions Unlimited, Inc.
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