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What Is Positional Trade And How To Trade
Position taken in stock, stock future, index, index future and option for more than one day is called Positional trading. Positional trading is also known as ‘Trend Trading’ can be described as buy and hold method.
Positional Trade is 2 types.
1. Short term
2. Long term
Short term-Buying or shorting stock or future and holding for 2-30 days is called short term. Some traders use very short period to trade like BTST and STBT which is buying today sell tomorrow and sell today buy tomorrow.
Long term- Holding any contract or stock for more than one month to several years is called long term. This is usually based on long term charts and macroeconomic factors. These types of traders are called investors. Long term positional trade generally beat inflation.
In short term positional trade, Trader generally follows Free positional Tips available in web or paid one ortechnical charts. Before taking position first theoretical trade which is also known as paper pen trade and then take small quantity.
How to trade positional?
EOD which stands for End ...
... of Day chart is the best chart to analyze trend and take position. This is available in technical charts. EOD gives the clear picture of trend and what traders are doing in the market. If you are learning technical charts then take Free Positional Tips and use it to compare with your research for study purpose.
Using EOD, how to find the trend of the stock or index?
First decide where to invest, in stock, index future or options. Let’s take example of Nifty index. EOD image is given below.
Near lower arrow nifty is at 7580 .Pink color area is called Bollinger band. Lower side of Bollinger band is called lower Bollinger band and upper one is called upper Bollinger band. Near lower arrow nifty is in over sold region and also touching lower Bollinger band. This confirms trend reversal.
This position also acts as support and this is a buy point. After trend conformation buy nifty future and give stop loss at 7550. Keep nifty position using trailing stop loss till it reaches upper Bollinger band or the overbought zone.Exit point is nearupper Bollinger band and it act as resistance.
Candle stick is also one of the powerful tools to know the trend and trend reversal.
Points to remember before taking position.
Always update yourself with world economic news and country’s financial health. Calculate your entry and exit point. Then calculate risk reward ratio. If favorable then take position.
Always use less than 40 of your total margin, keep rest margin for averaging if required in future.
Find Support and resistance from EOD. This gives trend, range of trade and entry and exit point.
When trend sudden changes, try to know the reason and its effect, then decide about exit or keep the position.
Don’t get tempted by small fluctuations and control your emotion. Stick to your target.
Advantage of Positional Trade-
Easy to learn. No need to give total time like in intraday trade.
Mr. Arthur Jackson, Technical Analyst and Founder of Nifty Trend providing trading advisory services in Free Positional Tips, Nifty Trend for Today, Equity, Derivatives and Commodity market. He also made a guest appearance in various workshops which were conducted on stock market awareness.
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