Position Trading

Position trading is a long-term trading style where you hold trades for weeks, months, or even years to profit from major market trends, not short-term price moves.

Key features of position trading

• Time frame: Weeks to years

• Trades per year: Very few

• Markets: Stocks, ETFs, options, forex, crypto

• Analysis used: Primarily fundamental analysis, supported by technicals

• Monitoring: Minimal day-to-day attention

How position traders make money

Position traders aim to:

• Enter at favorable prices within a strong long-term trend

• Hold through short-term volatility

• Exit when fundamentals or long-term trends change

Common position trading approaches

• Trend-following: Staying in major uptrends or downtrends

• Fundamental plays: Earnings growth, valuation, macro themes

• Sector rotation: Moving capital into strong sectors

• Buy-and-hold with timing: Similar to investing, but more active

Risks

• Market cycles: Long drawdowns can occur

• Fundamental changes: Company or economic shifts can break the thesis

• Patience required: Gains take time

Position trading vs swing trading

Bottom line

Position trading sits between active trading and investing. It’s often ideal for people who want market exposure but don’t want to trade daily.