Position trading is a type of trading strategy that involves holding a position for a longer period of time, typically several weeks or months, in an attempt to profit from the longer-term price movements of the securities they are trading. Position traders aim to enter a trade at a low.
Position traders use various technical analysis tools, such as chart patterns, indicators, and moving averages, to identify long-term trends and potential buying or selling opportunities. They also tend to focus on securities that are likely to experience significant price movements in the long term, such as stocks with strong fundamentals or those that are in a strong upward or downward trend.
Position trading is considered a medium to long-term trading strategy, as opposed to day trading, which focuses on much shorter timeframes, or swing trading, which holds positions for several days to several weeks. Position traders typically use a combination of fundamental and technical analysis to make trading decisions.
Position trading is considered a lower-risk strategy than day trading or swing trading, as it is easier to predict long-term price movements and traders can wait for the trend to play out before making a decision. However, it also requires more patience, as it can take longer for a trade to reach its full potential.