Position Trading

Is anyone here position trading? The reason why I ask is because most of the good folks I run into here on FF are intraday traders but I would like to get to know more people who trade on longer time frames, and brainstorm once in a while. Also please note whether you trade due to fundamentals, technicals, behavior, etc. and a little about your strategy if you care to share. Thanks!

Kris M.

Kris,

How do you define Position Trading?

I am not sure if I am a longer term trader yet, but have started using weekly TFs. Following is my analysis as of August 9, 2009:

1. JPY
2. GBP
3. EUR, CAD, AUD
4. USD

1 = Strongest
4 = Weakest

I used to consider individual fundamentals but for last few months rely on charts to give me net effect of all fundamental factors without going into much detail.

I use only trendlines, bull / bear flags, 50% fibs and round numbers to decide entries and exits.

My trading strategy is either x% profit or x% loss, number of winning trades to losing trades ratio decides my profit/loss, chart reading is the only edge to seek more winners than losers. Minimum 2 winners in every three trades is the goal.

Hi Chicky,

Thanks for the reply. Interesting strategy. I suppose the phrase "position trading" is up to interpretation but for me it means anything on a larger time frame than intraday- in other words, not having to be in front of the screen all day or even during certain times. I look at the markets every day but I make trades usually on a weekly basis and look to hold for 1-4 weeks or longer if it is really profitable. For example, I saw a fundamental setup happening with the GBP earlier this year and caught a chunk of that move just by adding positions on week after week. I didn't get in right at the start but I saw price action and sentiment agreeing with my view and took some risk. I don't claim to be able to time the market so I put on some trailing stops that give price plenty of room to breathe.

Cheers,

Kris Matthews

Hi Kris,

Basically, I developed this method for short term trading, but because of certain drawbacks of trading on smaller timeframes (including screen time), trying to apply it on comparatively bigger TFs (Daily) - few trades in a week.

My method has a basic limitation (or flaw) and therefore this method is inappropriate for TFs bigger than Daily. This major limitation of my method is - not getting direction from economic conditions that are the key drivers of whole FX engine. I use only charts assuming that they reflect the economic conditions as and when they change. This makes it a sort of calculated gamble rather than speculative trading that should be based on variable but real and reliable factors.

To me, position traders should get direction from economic factors and use technicals only as tactics, not as key strategy.

However, some back testing of my method seems to work on weekly TFs. Unfortunately, a position trading method cannot be tested in real time because of time constraint. Secondly, since it would be illogical to expect that technicals would work as key strategy on bigger timeframes, forward testing of my method is useless no matter whatever results are obtained over any given future period of time.

Thanks for your replies. As far as S/R, I blend a little bit in when I can. I don't treat all S/R equally, because everything must be considered in the "now" context. For example, a previous high that was broken 5 months ago may not necessarily be a good support today because the market participants who are leading the moves today may be whole different group. On the other hand, if I sense that the market is lost or looking for some reference point to anchor to, then I will look at some major S/R levels. Gary Norden, friend of mine and author of "Technical Analysis and the Active Trader," goes over this in detail.

I'm not a big technical guy but I understand all of its concepts. When you talk about S/R, are you referring to fibonaccis, prev. H/L, or what? Just curious.

All the best in your trading,

Kris Matthews

Was someone here?