Position Trade
Position Trading is an active strategy wherein the trader holds investments\positions for a long period, days, weeks, or months, waiting for a big price move to achieve outperforming the market. Traders generally use long-term charts (weekly, monthly) to initiate trading positions.
A Position Trader buys an investment for the long term in the expectation that it will appreciate in value. This type of trader is less concerned with short-term fluctuations in price and the news of the day unless they alter the trader's long-term view of the position. Position Traders might be seen as the opposite of day traders. They do not trade actively, normally not more than 10/30 trades in a year. Position Traders are, by definition, trend followers. Their strong belief is that once a trend starts, it is likely to continue for some time.
Position Trading has grown in prominence over the years because it avoids one of the most significant dangers of intraday trading: needing to level out a transaction before the end of a trading session. Positional trading allows one to sustain positions for days, weeks, or months, depending on your objectives. Positional trading does not have a specific period; instead, it can be chosen depending on the nature of the deal.
Position Traders and differences for Day trader , Swing trader and Long terms Investor:
A Position Trader buys and holds until a trend peaks. A Day trader buys and sells within hours or minutes, the Swing trader hold an investment for a few days or weeks because they believe it will soon see a price pop, a Long Terms Investor is a buy-and-hold investor that buys for the long term , months ,years ,and are classified as a passive investor
To be successful, a position trader has to identify the right entry and exit prices for the asset and have a plan in place to control risk, usually via a stop loss level.
Position Traders may use technical analysis , fundamental analysis , or a combination of both to make their trading decisions. They also trust and believe in macroeconomics factors, general Interest rates, Unemployment rate, GDP (gross domestic product), market trends, and historical price patterns to select investments which they believe are about to go higher or down.
Position Trading is ideally suited to a bull market with a strong trend. It doesn't lend itself easily to a bear market . In a period in which the market is flat, moving sideways, and just wiggling around, day trading might have some advantage
Advantages of position trading strategies
A big advantage of position trading is that it doesn't take a lot of time. Once a trade has been initiated and safeguards have been implemented it's a matter of waiting for the desired outcome.
Positional trading is a long-term strategy that can yield significant gains.
The positional trading strategy takes advantage of large stock moves during weeks and months.
As positions do not need to be examined daily, the trader is less concerned than with certain short-term techniques.
The positional trading strategy simply necessitates time spent analyzing probable stocks, leaving greater time for other transactions or professional duties.
The most common risks in Position Trading include low liquidity and the risk of trend reversals. Whenever there is an unexpected reversal in an asset's price trend, significant losses could happen for position traders. This is why it is very important to always put a stop loss level. Position Trading also requires investors to tie their capital for a longer period. Therefore, it is advisable to evaluate your risk profile before entering in a position trading.
Conclusion
Trading is a high-risk activity, and traders must train and test themselves before achieving significant market success. Position trading is also the same. One must spend considerable time observing, understanding, and comprehending market movements to learn position trading. The best way to learn position trading is to analyze past data and derive patterns. Once a trader understands the market patterns, it becomes relatively easy to identify and execute trading strategies while following sound risk management principles.