A great trade over a few days

One of the most common questions people ask me is how long do I hold a trade for. There is no easy answer to that question. How long I hold a trade for depends on where my indicators show an exit signal. I am sure they are expecting me to say I hold a trade for no longer than five minutes. That is so far from how I trade that I can't begin to tell you. I know there are people who do trade like that. Most new traders would love to think that they can trade like that but the reality is that 99% of people will not be able to be successful trading that way. Why not be a little more realistic about your abilities to start with? I find that day traders, even successful ones, spend more time out of a trade than they do in it. That makes no sense to me. If you would like to have a go at trading shorter term, start with holding a position for a few days to weeks. I don't trade penny stocks at all but I do like to trade small caps to give me a bit of a challenge. This is a small percentage of my investment portfolio so the risk is limited and the reward is in my favour because of the quality of small caps that I trade.

In my next post I am going to show how I identify stocks to trade. The worst thing you can do is go into chat rooms and look at what people are talking about and try to trade those stocks. That is a recipe for disaster for so many reasons. You have to take charge of your own trading and make your own decisions.

Click on the chart to enlarge

This was my second go at trading this small cap stock that listed recently on the ASX. It is code A2M. This stock listed in New Zealand a few years back so I knew it quite well when it listed here. I didn't take part in the IPO but I have done very well with it soon after it listed and again this time on my second go at it.

I have posted the 5 min chart here to show my exit on the trade. I exited all three positions at once. (you can see the initial entry point on the daily chart.) 

This is the hourly chart with just the 2 line MA. You can see my exit was at $1.10 when the price crossed below the 6 MA.

I am only showing this daily chart so you can see where my initial entry was for this trade. I don't trade off the daily chart. The trade was held from the 10th Nov to the 24th Nov. You can see my entry was the cross up of the daily MACD. Then I added two more times to the trade and exited all the positions at once.

This is not a recommendation to trade. Just an example of what I do.