Position trading is one of the most loved trading strategies. Position traders hold the position for a period of a few weeks or a month. They try to gain significant profits from the price difference between a few weeks. Sometimes it might be risky if the market trends against you. Therefore traders should always have a proper trading plan and strategies for determining the market trend and when to enter and exit the market.
Position trading is always based on technical analysis. But at the same time, some fundamental analysis is also required. Therefore it’s more important to stay updated with market trends, indicators, and charts as traders are not actively involved in the market compared to day traders.
Position trading can be a great method for earning good profit from long term positions in any financial market. Here we are briefing some of the most important position trading strategies. These strategies can help the traders to dilute the short term market trends and traders can focus on the market properly for long term positions as positional traders always avoid the short term price movements.
In breakout trading, traders open the position when the price level is moved from the specific resistance or support level. If the price moves above the resistance level, they attempt the long position, while if the price moves below the support level, they attempt the short position.
This strategy requires good determination of the support and resistance levels.
In range trading, traders open the position when there are continuous price fluctuations. Traders always buy the asset which is oversold and always sell the asset which is overbooked. Price range method is used by the traders to find the overbooked and oversold assets. Particularly assets which are unpredictable are the best for range trading.
Support and Resistance
Support and resistance levels help the traders to identify the price movement range of the asset. Resistance creates the upper level while support generates a lower level. Support and resistance levels are identified by the historical data. The time span of losses and gains can be the indicators for the traders for the future price trends.
When breakouts, the levels of support and resistance are changed. To understand the price movement of the asset traders use the last support and resistance levels. Another indicator which offers technical support for understanding the fundamentals of support and resistance.
Traders use the pullback for planning the entry. When the market is rising in an uptrend, short moments are created due to market reconciliation known as pullbacks. Pullback mainly focuses on buying low and selling high. Therefore when the market price drops, while pullback, traders take the position in the market. They have to remove the possibility of reversal movement when the pullback occurs. Therefore they utilise the indicator Fibonacci Retracement.
With the help of Fibonacci Retracement, potential traders identify the timing of the opening and closing of the position. With Fibonacci Retracement, traders draw the lines on the price graph at 23.6, 38.2, 61.8%, and use these lines for detecting the support and resistance lines and imply these for identifying the trading chances.
200 and 50 days EMA Crossover
200 and 50 days EMAs are the perfect moving average for position trading. Traders always try to trade when the moving average crosses each other. When the fast-moving average passes, the slow-moving average from under the intersection point is known as golden cross. It signals for the bull market. While when the 50 days moving average passes the 200 days moving average from above, then it signals the bear market. That point is known as the death cross.
Positional traders use technical and fundamental analysis to recognize the market trend. These above strategies aren’t simple to execute; they need thorough practice and experience. Position trading is the best strategy in every financial market. To know more information about the different trading strategies you can visit FxReviewTrading — Genuine Forex Brokers Reviews, Articles, News