What is the recommended timeframes for long term positional traders?
When traders hold on to their open stock positions for weeks or for months together, it is termed as positional trading.
Trades are not allowed to short the market in stocks and shares and carry forward the position overnight.
In order to short the market and carry forward the position, they will have to trade in the futures market.
When you do online trading in the share market, you need to apply trading strategies in order to take positions in the stocks.
If you are a positional trader, then you will have to analyses the stock from a long-term perspective. Apart from the financial aspects of the company, technical analysis also helps you to a great deal to take long term investment positions in stocks.
The basics of long-term positional trades
The two primary things that traders look at when taking a trade are the trend of the stock and the high prospect support and resistance levels.
The trend of the stock principally tells us if the stock is bullish, bearish or neutral.
We need to make a trade along with the trend in order to profit from the market. Traders also take counter trend trades which are highly risky and may stop you out frequently.
Only experienced traders should take trades against the trend.
The support and resistance levels indicate where to enter and exit the market.
You need to buy into the stock where it has the highest prospect of going up.
The support and resistance levels are formed where there is the maximum disproportion between supply and demand.
When price retests that level, it gives you a buying opportunity in the market.
By means of multiple time frames
If you are a positional trader, then you will need to use multiple time frames to assist with your trading.
60 mins chart, Daily chart, and Weekly chart are the most frequently used timeframe charts to take a positional trade.
Spotting the trend of the stock on the weekly chart is necessary. This is your prevailing trend of the stock and you need to take your trades based o this trend.
The daily chart lets you look out for high-quality support and resistance levels.
In the 60 min chart, you can adjust those levels so that you have a less risk on the trade.