Long-term Trading Systems are also known as Position Trading Systems are designed for investors who are trend following yet whose objective is to gain as high a price as possible when selling and as low a price as possible when buying.
Market analysis isn’t always at the forefront of these investor’s minds since they occasionally spend the minimum amount of time on study. However, this strategy can satisfy the Position Traders needs while providing a useful trend analysis.
Tools used in this strategy
The Long-Term Stock Trader Strategy uses trend analysis adopting a thirteen-period average on a weekly chart as well as market fundamentals to determine potential of the stock he is buying
Poring over pages of company analysis is not necessary if the investor is aware of the EPS (earnings per share) for the last quarter. Various filters are available online that can assist in the analysis in any event.
Entry into a position.
At the moment the candle closes above the mean, while the average is upward, it is a signal to buy. If the candle closes below the average and the angle of inclination of the EMA is down, then a short is indicated. When this scenario is completed, the trader at the beginning of the next week will hold the long position. In the case of a buy signal, the SL is below the minimum price of the previous week. In the case of a sell order, the SL is set above the maximum from the previous week. When the signal is generated, the trader needs to verify that the company generates profits. To be able to say this, he will need a positive EPS result. In the case of a short position signal, a negative EPS will be a confirmation for the position.
Exiting the Position
On a long position, the stop is placed below the previous weekly close. There is no rigid take profit level. In the case of a buy, the performance of the business is paramount. For sellers, the whole outlook for the business, the sector and the economy are factors concluding with a zero-sum game.
Capital management
Higher risk apportionment is possible for a longer-term investment since this is an investment position rather than a trading position. 3% of capital is the recommended transaction size to allow the investor to “fight another day” should his, limited, analysis be proven incorrect.
