Swing Trading Vs Position Trading

Position Traders vs Swing Traders: Who Make It Big In The Stock Market?

In the world of investment, a variety of trading strategies have evolved, catering to different groups of trades.  Today, for any asset segment, you will find four main types of trading strategies, namely day trading, scalp trading, swing trading, and positional trading. If you are planning to enter the market, then you need to pick up a style of trading that suits your trading personality.  Normally, traders select one trading strategy and stick to it, but crossovers also happen, mostly in using technical indicators which are widely used and forms the base of technical trading.

If you are a novice investor, it can take you a fair amount of time to understand each trading type. To make it easier for you, in this article, we will discuss position trading vs swing trading, the two common forms of long-term trading.

Swing Trading

Swing trading is directional trading, where the trader tries to take advantage of short-term price movements.

In swing trading, traders get involved in deals that span over several days or weeks. Unlike day traders, they trade infrequently and don’t close their position at day end. They hold onto their position and wait for a larger profit to emerge. They take a bigger risk for bigger profit and therefore, sometimes swing traders trade also against the market trend. They use market indicators and technical analysis to predict changes. When an asset enters the overbought or oversold area, the swing trader takes the opportunity to plan a trade.

One difference between positional trading and swing trading, the latter has more trading opportunities than the former.

Positional Trading

The duration of positional trading is closer to long-term investment. Position traders enter into deals that can last for weeks and even months. However, in investment, the investor enters only a long position, but in positional trading, traders enter into both short and long positions. With this trading strategy, traders avoid the daily gyration that day traders undergo.

Positional traders use an array of fundamental and technical analysis, trading indicators, and patterns to eliminate daily noise.

On the fundamental level, positional traders rely on industry and company information to form a decision on their asset.  They pick stocks that they believe will grow significantly over a period.   They spend a lot of time in finding assets that worth their attention.

Making The Decision

In the discussion of position trading vs swing trading, often the question that arises next is which one is a better style of trading. Both trading styles focus on making a bigger profit by identifying assets with momentum and following a market trend to strike a deal when an opportunity arises. Traders adopt a style based on risk-taking ability, the time they want to invest, and also on market volatility.  Before you initiate a trade, check the market condition for the asset.

Both styles suit investors with long-term plans. However, swing traders would trade more frequently than position traders. You can adopt a swing trading technique if you aim at generating cash-flow. Position trading, on the other hand, concentrates more on generating wealth over time.