Monday, August 20, 2012

Position Trading

MetaStock SPRS Series - Week 82 - TechniTrader® Stock Discussion for MetaStock Users - Position Trading - August 20, 2012
By: Martha Stokes C.M.T.

Position trading is an easy to learn short term trading style that can provide extra monthly income for part time traders. One of the huge advantages of this type of trading is how little time it takes and the low risk of the trade.

The first step for most position trading is to find stocks that are bottoming. An ideal pattern is when the TechniTrader® Quiet Accumulation TTQA shows a shift of sentiment. TTQA shift of sentiment occurs when High Frequency Traders HFT automated orders, trigger panic among smaller funds who then sell heavily just as a stock is commencing a bottom. You can see this pattern clearly in the chart below. HFT red volume and red TTQA is followed by smaller funds selling as the stock bottoms. Then the shift of sentiment occurs with TTQA turning gray and then green, with average volume green bars exposing Quiet Accumulation from Dark Pool activity of the giant and large funds.

Chart 1

Further confirmation is seen with TechniTrader® Volume Accumulation TTVA, the volume oscillator provided by TechniTrader® that exposes consistency in volume patterns over time. As this volume oscillator moves above its center line and the ROC crosses below, the Dark Pool quiet accumulation activity is easy to see. TechniTrader® Flow of Funds TTFF the flow of funds indicator, also confirms steady inflows of buying by the institutions from Dark Pools.

Chart 2

Once the bottom is confirmed use a weekly chart to determine where resistance will stall price, and also to identify when the bottoming formation will be complete. The first level of resistance is the completion level for a bottom.

Chart 3

Position traders need to start watching stocks at the first indications of Dark Pool activity. Dark Pools are huge share lots often buying millions of shares of a company over several weeks to several months. When High Frequency Traders learn of the Dark Pool accumulation, they rush in and drive price up speculatively. This is why so many bottoms have strong velocity moves prior to the first level of resistance.

Position trading can be a highly lucrative trading style that doesn’t require the heavy commitment of time and resources that swing and day trading require. You can start with a much smaller capital base and you can study charts once a week, on a weekend, or in an evening rather than the daily studies required by swing and day trading.

Position trading is also far less risk as you are buying a stock that has completed a bottom and is poised for solid upside gains over several weeks to months.

This is a much slower paced, less frenetic style of trading that many busy people who simply do not have the time to trade every day can use for extra monthly income. Position trading is fun and rewarding.

If you are trading part-time consider position trading as an alternative to the more demanding swing and day trading styles.

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
MetaStock Partner

©2012 Decisions Unlimited, Inc.

Disclaimer: All statements, whether expressed verbally or in writing are the opinions of TechniTrader, its instructors and or employees, and are not to be construed as anything more than an opinion. Student/subscribers are responsible for making their own choices and decisions regarding all purchases or sales of stocks or issues. At no time is any stock or issue on any list written or sent to a student/subscriber by TechniTrader and its employees to be construed as a recommendation to buy or sell any stock or issue. TechniTrader is not a broker or an investment advisor it is strictly an educational service.

No comments: