What is a position trade? It is a longer time horizon trade that requires less precision in terms of entry while risk is managed more with size rather than stop orders. This market is slower compared to the others AND it is trading in a general area that offers attractive reward risk (.618 relevant to recent swing) . On top of that, there is a reversal pattern in play on the 4 hour time frame. There is enough criteria for me to justify taking a fractional position with the plan to add if there is a selling spike below 200.
Why no stops or targets? Risk is managed in multiple ways, and a stop order is not always the best way. Since price can still push lower, I would rather control my risk by starting with a smaller position. It helps me withstand any adverse noise. If price completely falls apart, my loss will be much smaller than if I put on a full position now.
I intend to add to this position only if 2 scenarios unfold: the first would be the price spike that retests the low 170s. This would be an extreme move and much less likely, but if it occurs and the lower boundary of the reversal zone is rejected quickly, I will look to add in that area. The other scenario is if price can break above 253 and then establish a higher low which will be confirmation of a momentum change off of the range low. I won't get the best prices, but momentum will be in my favor which is acceptable for me.
As far as exits go, I will attempt to lock in some profit IF price can retest the 300 area while holding onto a smaller position for the longer term to see how far this market wants to go. Position trades are more like investing and have criteria that is less restrictive.
In summary, averaging into a market is not a "better" way or "safer" way to trade, the choice is more dependent on your outlook and risk tolerance. The big picture is and the entire environment is still fundamentally . As long as that is the case, I am confident in averaging into a position in a slower and cheaper market like this one. I am also realistic. If the market falls apart, (anything can happen) I can take the loss because it is limited by the smaller size. This technique is NOT a good idea if you are using margin, because that is when losses can get magnified to the point of wiping out your account. Having a sense of context is also very important for trades like this, because it helps you see through all the hype, nonsense and noise.
Comments and questions welcome.