Position Trade System With a Powerful Tweak

by Donald Harder

Unlike day traders or swing traders, position traders may hold their trade positions for several weeks to several months at a time. As a result, simply reading stock charts without knowing anything about the company can really result in a lot of frustration. Fortunately, you do not need an MBA and a team of research analysts to position trade successfully. Just following a few basic guidelines can put your positions on the right side of the tape and a couple of simple tweaks can change your results from average to spectacular.

Position Your Trades On the Right Side of the Market

The first and most basic step to any position trade is to make sure you own stocks that are on the right side of the market. In other words, you do not want to buy when the market is in a correction. The easiest, and arguably most powerful way to make sure your trades are positioned on the right side of the market is to check the 200-day average (or 50-day average if your position trade time is a few weeks as opposed to months). If the 200-day average is rising, buy the dips and if it’s falling, sell the rips.

Pay Attention to the Dollar

The dollar has been increasingly important for stocks, especially since the 2008 financial crisis. Without getting into the right or wrongs here, the government has been printing dollars to buy their way out of a recession. Higher dollar prices mean a flight to safety (out of stocks) whereas a falling dollar means inflation and inflated stock prices. You can track the dollar using the $UUP symbol.

Tweak 1: Position Your Trades with Market Leadership

Most retail traders just do not have the same advantages fund managers have. Fund managers and large banks have teams of research analysts that help them determine which companies have the best future growth prospects and which are likely to do well over the next few months. In fact, these funds are the ultimate position traders, so what better way to position trade than to follow the best?

You can follow leadership by paying attention to which stocks are leading the market. Stocks leading the market are the same ones under accumulation by the ultimate position trade funds. One way to keep tabs on market leadership is to tap into the free resource at StockTwits 50.

Tweak 2: Only Trade Growth Positions

Blindly following leadership stocks may not be enough to earn serious profits on your position trades. In order to really turbo charge your profit potential, you will have to do a bit of fundamental research. Fortunately, you can check Yahoo! Finance and a number of other free sources before you buy a stock.

Now, again, you don’t have to be an expert at reading balance sheets and other financial statements. Just making sure the company you buy has a few quarters of increasing earnings, has reasonable profit margins (compare against its competitors, not other industries) and a reasonable return on investment. Red flags are losses, big long term debt and management that is dumping shares.

Or, if you don’t have time to do this research yourself, we are happy to do it for you. Just fill out the free trial form to the left of this article for free stock picks and detailed daily trade reports and market analysis.