Position Trading
A trading style holding positions for weeks, months, or longer based on major trend or fundamental analysis, representing the longest-duration end of the active trading spectrum.
Position trading is a trading style in which positions are held for weeks, months, or even longer, based on an assessment of a major, sustained price trend or underlying fundamental factors, rather than on short-term price fluctuations. It represents the longest-duration end of the active trading spectrum, sitting beyond day trading (see Kaavon's "Day Trading" glossary definition) and swing trading (see Kaavon's dedicated glossary entry) in typical holding period, while still involving active analysis and decision-making, distinguishing it from a purely passive HODL (see Kaavon's "HODL" glossary definition) buy-and-hold approach.
Because position trading operates on a much longer time horizon than scalping (see Kaavon's "Scalping" glossary definition) or day trading, it's generally less sensitive to short-term volatility, slippage, and trading fees relative to the position's overall expected return, but it requires the trader to tolerate potentially significant short-term drawdowns along the way to a longer-term thesis playing out, and to have genuine conviction in the underlying trend or fundamental factors driving the trade.
Examples
- A position trader might hold a position for several months based on a thesis about a major structural trend, tolerating significant short-term volatility along the way.
- Position trading's longer time horizon makes it generally less sensitive to short-term slippage and fees relative to the position's expected return, compared to scalping or day trading.