Position trading-safest and best?

Discussion in 'Technical Analysis' started by sh50, Oct 3, 2005.

  1. sh50

    sh50 Active Member

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    The experienced traders that I have come across have all been strictly against day trading. There are a few people who on this forum have spoken favorably though many have spoken against.

    My expereience with swing trading has also been unfavorable because the mkt is under no compulsion to follow the rules of Technicals for a span of a few days where again anything can happen.

    Position trading which is somewhat like investment seems to be the safest though there again one could still go wrong. Mkts are essentially unpreditable and anything can happen in any timeframe.

    Individual temprament also matters a lot. There are no clear cut answers but I hope experienced traders contribute to this. How should a newcomer go around learning?. Its better if those who want to make it one thier own steam reply rather than recommend a newsletter.
     
  2. srinimd

    srinimd New Member

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    Hi I agree with you on day trading. can you be more in detail about position trading.

    in the F&O segment , at present going long on Nifty is the safest and you need to watch closely the market movement. set a target and be stict to it and keep doing it .
     
  3. AMITBE

    AMITBE Well-Known Member

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    Hi sh50,
    Feels rather funny to be responding to your idea...you who are one of the most distinguished seniors of this great forum.
    From my own experience, I would say I agree with you on day trading. I have done it in the past, but beyond a point couldn't see the virtue in giving up a trade as on most occasions I was able to locate counters that had a substantially more upside than could be covered all within a day. Also as a swing or position trader, I would have more leeway in case of temporary setbacks, and not be stopped out. Over a period of time I calculated the give and take, and found if I held position from a few days to weeks and at times even two or three months, I was way ahead then I would be in day trading.
    I see the line seperating swing trading and position trading as very fine indeed, specially in a secular bull market. If the time horizon is the only chief difference, then perhaps I would straddle both sides. Both the systems of trading seek to identify stocks where the technical trends suggest a possible large movement in price is likely to occur, but which may not be fully played out for an extended period of time if need be, for even a swing trader, going by thchnical indications, would not easily exit when there is more to come.
    At times I do exit and enter the same counter over and over again to catch a new upside after a period of correction or consolidation.
    On a point of divergence from you, I find technical indications most reliable under most circumstances. Yes, the market is under no compulsion to follow the rules, but if one is tuned in on the wider picture at any given point, there are plenty of signs and signals to change or alter the course of action.
    I absolutely agree that individual temprament would make all the difference in the approach.
    Another aspect is the skill and experience in TA, and the confidence this gives. Under no circumstances would swing or day trading be recommended to a newcomer, and certainly not to be guided by newsletters etc.
    Further, points like money management, share sizing etc are all important to successful trading, and fall outside the scope of TA.
    I would say for a newcomer, position trading would be the best option to begin to learn trading.
    Thanks.
     
  4. swingtrader

    swingtrader Member

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    Very nice topic, I hope many take part in this discussion.

    I started with day trading stocks & futures, due to time constraints moved to swing trading stocks (my holding period was from 3-10 days), but I am now "swinging" more & more towards position trading (no fixed holding period, will let the trend dictate the holding period). I believe position trading is the most comfortable way for newcomers to start trading and it could potentially be the most profitable way but requires lot more equity to trade when compared to day trading. Day trading in my opinion requires lot of skill & discipline that has to be first built before starting to trade. I must admit I am not ready for day trading.

    As you rightly said it all depends on the individual. One has to find the sort of style one is comfortable with (and has the time for it).

    --SwingTrader
     
  5. jaideep

    jaideep Member

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    Nice topic & nice discussion. Guess I'll throw in my glove here & run the gauntlet of skeptics and critics.

    Have always been into a mix of intra-day, short-term & mid-term trading. No great success stories to boast of but an end-of-the-day success is what I would label myself. Long-term trading is a big NO to me as any kind of TA or FA over that sort of time frame would lead to the most unpredictable kind of price forecasts. I don't trust looking beyond my nose on any matter.

    Intra-day trading is all about "following the trend" as has been much harped upon in various fora. I do that. Smell a trend, follow it UP or DOWN & square off. My targets are small & maybe that's why I'm singing this song. :cool:
    Remember what's been said by the greats; "Tiny drops fill the ocean". Small profits add upto a big bonanza. Wait for the big one & you miss out on the easy small ones. :eek:

    All opinions are are mine & mine alone. Patent applied for". :D

    In any case, Happy Trading guys. Each for himself/herself as far as style goes. All else is equal. :)
     
  6. sh50

    sh50 Active Member

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    Thanks for your comments, Amitbe. The really distinguished members are people like you who discuss shares so actively and share their experiences. I have only an year and a half's experience in trading.

    It is nice of you to profess so much faith in TA. I always used to wonder why with so many fancy books and software, Trading has a 95% failure rate. Its probably because graphs can tell you about highhighs and dips but which higherhigh or which dip will be profitable is impossible for any indicator to predict in the short run. In position trading, the timespan is much longer and so the chances of the dip or higherhigh being profitable become better as more leeway is provided for fluctuations. Nobody can be absolutely sure which is why many people become analysts, issue newsletters etc(When you can't kiss the mistress(market), kiss the maid(means). Many ppl have told me that the real traders always remain anonymous-busy making money.

    Though ideally, one should begin trading with position, the general tendency is to flirt with day and swing just to get a feel of trading.
    My experiences are more in consonance with swingtrader though Jaideep's views are interesting as usual.
    I remember swingrader had written a fine piece with a graph. I think that was on swingtrading. Similarly its worth sharing experiences on position trading as well. I have learnt that when the RSI(14) turns midway in the weekly graph after making a higher high(above65), using daily graphs for dips can prove to be one of the most important signals for a 2-3month time span. One can exit on divergences on the daily graph. Intraday 60min graphs can be used for pinpointing entries and exits.Using too many fancy indicators only confuses and makes one indecisive.
     

  7. srisara

    srisara Member

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    its a nice discussion shaping up here. let me too jump into this and share some of the after thoughts which i realised after a stint of 1 year into the Trading.

    Generally most of the people jump the gun, before they can dump the gun. I mean, we just rush ourselves into trading, hardly few people resolve why they are entering into this market and for what purpose.

    1. We need to make sure whether we are an investor, trader or a mix of both
    2. Based on what we decide, we need to make a strategy.
    3. I say, banks give you 10% interest, even at the end of the year you make 20-30% profit in the market it is much more than that. for ex: last year august i bought Infosys @ 1450 and now the C.M.P is around 2600. A cool appreciation of close to 45%. No Technicals here, just invest in sound companies(Blue Chips) and forget, they will reap you profits in lots over a period of time. Unfortunately, to cover my lossess in day trading, I have to close my positions @ 2000 itself.
    4. Day trading is very risky and so too F&O. Its not a child's play and often if caught on a wrong side, you are out of business.
    5. For a peaceful trading, i feel positioning trading is the best, but be alert all the time.
    6. I have sufferred sleepless nights because of the lossess i incurred in day trading and F&O. I have the confidence to recover, as any bad things just take a minute but for a good thing whole life is not sufficient.
    7.Its upto a person to decide, whether to sit and watch or commit a suicide.

    At present developing the right attitude for Trading and evolving my strategy of how to remain in the business.

    Hope newcomers are listening.....

    Satya
     
  8. dpak

    dpak New Member

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    for me a novice pl tell me ? is position trading?
     
  9. Traderji

    Traderji Super Moderator

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    An investing strategy in which open positions are held for an extended period of time. Usually from a few months to a year or more.

    A position is the amount of a stock owned or owed by an investor or trader.
     
  10. vince

    vince Active Member

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    Hi friends,
    When we discuss position trading versus day trading let us not forget they are 2 sides of the same coin. The only difference is the risk/reward. The basics of the game remain the same. What do we need to have a trade?
    1) Entry point
    2) Stop loss
    3) Exit
    In other words a trading system. If we have the above we have a trade.

    Further markets cannot be predicted in any time frame and we should not even attempt to do so.
    Markets can only do 3 things namely:go up, go down, and remain where they are, and since what the markets do is beyond our control we can only control our reaction to what the markets do?
    If you are ready with your reaction to the above you are ready to trade.

    I would sum it all up to say "A good trader is a good trader in any time frame" and the vice versa also holds true.

    Regards and trade well.
     
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