Invest and Trade Profitably with Jon Johnson

Occasionally you suggest making a ‘partial’ buy which I assume is about half a position. When do you make the rest of it? What does it depend on?

August 30, 2000

You are correct; typically partial positions comprise anywhere from one-third to one-half of what we plan to put into a position. The rest is taken at the next good buy point, e.g., on a move up after a lower-volume test of the breakout (if the initial buy was taken was on a breakout), or on a break over the next level of resistance on strong volume. Another event in which we might make partial buys is on a bounce off a short term moving average if it is a breakout and the stock starts to run up the 10 day or 18 day moving average.

Therefore, initial, partial positions can be taken on a good-looking move that may not be entirely bulletproof such as early in the session or with volume that is not quite there or after a fast strong surge that looks as if it will go higher. We can add to those positions depending upon the action the stock takes in the aftermath. Decisions also include considerations of price/volume action, of course, which help us interpret if any move is healthy or not for taking the remaining positions.

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