If you’re looking to get into position trading in Singapore, this guide is for you. Position trading is a strategy that can be used in all markets to capture moves that develop over time. This guide will teach you the basics of position trading and tips for executing the strategy successfully. So, keep reading if you’re ready to learn how to capture considerable profits in the markets, and check out Saxo.
What is position trading, and why should you do it in the Singapore stocks market?
Position trading is a strategy that involves maintaining long-term positions in the markets and holding trade for weeks or even months. This strategy aims to capture more significant market moves and can be used in any market. Many position traders use technical analysis to find trade setups, believing that the price action contains all relevant information.
How to find the right stocks for your position trading strategy?
You need to look for a few things when finding stocks for your position trading strategy. Firstly, you want to find stocks in an uptrend or downtrend. You can identify this by looking at the price chart and seeing if the stock is making higher highs and higher lows (uptrend) or lower highs and lower lows (downtrend).
Another thing you want to look for is liquidity. It is essential because you don’t want to get stuck in a trade you can’t exit. The best way to measure liquidity is to look at the Average Daily Volume (ADV). It is the average number of shares traded daily, and you can find it on most stock charts. A stock with a high ADV is more liquid than a stock with a low ADV.
Finally, you want to look for stocks with low volatility, and it is because you don’t want the stock price to move around too much while in the trade. You can measure volatility using the Standard Deviation indicator, and a stock with a low standard deviation is less volatile than a stock with a high standard deviation.
The benefits of position trading over day trading or swing trading
There are several benefits to position trading over day trading or swing trading. Firstly, position trading generally requires less time commitment than shorter-term strategies. It is because you’re only looking at the charts a few times a week instead of multiple times per day. Additionally, position trading can take advantage of significant market moves. It is because you’re holding onto the trade for a more extended period, which gives the market more time to move in your favour.
Another benefit of position trading is that it can be less stressful than shorter-term strategies. It is because you’re not constantly monitoring the markets and don’t need to make split-second decisions. Additionally, position trading can be more profitable than shorter-term strategies. It is because you’re aiming to capture more significant market moves, leading to more enormous profits.
How to execute a position trade in the SGX stocks market?
Now that you know what position trading is and the benefits of this strategy let’s look at how to execute a trade. The first step is to find a stock that you want to trade. As we mentioned, you want to look for stocks in an uptrend or downtrend. You can also use technical analysis to find trade setups.
Once you’ve found a stock that you want to trade, the next step is to enter your order. For position trades, you generally want to enter a limit order. It is an order to buy or sell a stock at a specific price. You can control the price at which your trade is executed by using a limit order.
The next step is to manage your trade. It includes setting a stop loss and taking profits. A stop loss is an order to sell a stock when it reaches a specific price. It is essential because it protects you from significant losses if the market moves against you. A take-profit order is an order to sell a stock when it reaches a specific price. It is essential because it allows you to lock in profits as the market moves in your favour.
Finally, it helps if you exit your trade. You can do this by either closing your position or by using a trailing stop. A trailing stop is an order to sell a stock when it falls by a certain percentage from its high point. It is essential because it allows you to stay in a winning trade while protecting your profits.
Tips for managing your risk when position trading
Position trading can be a great way to make money in the stock market. You need to keep a few things in mind to manage your risk. Firstly, you must make sure you use stop loss and take profit orders. These orders will help you to limit your losses and lock in profits.
You need to be aware of the risks of holding a stock for an extended period, including the risk of the stock price falling and the company going bankrupt.
Finally, you must plan what you will do if the market moves against you. It includes having an exit strategy and knowing how much capital you’re willing to lose on each trade.