Positional Trading

Positional trading is the slow end of technical trading. The position is taken in the direction of the primary trend and held through ordinary pullbacks. Stops sit beyond weekly structure, not beyond yesterday's low. Entries are infrequent. The method looks like investing with a chart-based exit, and the difference is that the exit is pre-committed. You are not holding because the company is a good company. You are holding because the trend structure you defined is intact. When that structure breaks, the position goes, even if the story has not changed.

Use the weekly chart for the trend and the daily chart for the entry. A pullback to a rising weekly average, a breakout from a monthly base, a hold of a major higher low. Size from the weekly stop, which will be wide. The resulting position is smaller than an intraday trader expects, and that is correct. Check the calendar at the holding period: earnings seasons, rebalances, dividends if they affect your instrument. Review the position on a schedule, once a day or once a week, not on every intraday dip. If a dip inside the weekly structure makes you exit, you are not trading the position you sized. You are interrupting it.

Write the invalidation in weekly terms and do not translate it into a tight daily stop after the first red day. Take partial profits at major extensions if you want to pay yourself, and trail the rest under weekly higher lows. Positional trading is where trend-following studies have the most to say, and also where the drawdowns are the longest. You will sit through pullbacks that look, in the middle, like the end. The rule for what is actually the end has to be written when you are calm.

Taking a positional size and then applying a day trader's stop. Also adding to a loser because the "position" allows a long view. Adding is a new entry and needs a new setup. And ignoring a structural break because the fundamental story is comforting. If you wanted to invest on the story, do that, with an investor's plan. Do not borrow the story to avoid the chart exit you promised yourself.

Wide stops mean a single gap on a weekend or an earnings date can exceed the planned loss by a wide margin. Size for that or do not hold through the event. Positional systems are slow to prove. A handful of trades a year will not tell you, for several years, whether you have an edge or a bull market. Keep the journal anyway. The regime will change, and the weekly break is the only thing that will make you leave.