THE HYBRID TRADING METHOD
We use a hybrid style of trading and investing on the long side. After careful due diligence, we establish initial core positions in the stocks we want most. We do this after they are beaten back or short-sold to new lows and technical indicators show they have reached a bottom. This position is usually held long-term, regardless of market fluctuations, and is best kept in a separate brokerage account.
Upon favorable technical indicators or a pending event, we "position trade" our "second positions". . .this is when we go into SAM or "Stealth Accumulation Mode", and take positions silently, so as not to cause premature momentum. Upon the first signs of volume driven momentum, some of us take "third" and final "swing trade" positions. When the stock either breaks out on heavy volume or gets slammed by short-sellers, we sell our third positions and "re-load" when heavier volume driven momentum returns. . .trading in and out as often as is necessary. When momentum has peaked and volume begins to slow, we sell all or a portion of our "second" position trades. We then look for technical analysis to indicate a near-term bottom before buying back our 2nd positions. We hold our core positions until the market peaks of spring, where most of us take our profits before the summer doldrums.
A variation on this method is to "pyramid" our positions. For instance, our first position would be say 50% of our total, our second position would be 20%, then we would split the final position into three equal divisions of 10%. This is helpful for taking larger long positions, yet still playing the trends with smaller amounts. . . .so that poor short-term trading, doesn't hurt our long-term strategies.
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