Position trading aims to capitalise on medium to long term market trends. There’s no rule of thumb of how long a trade must last to be defined as such, but generally several weeks to several months is the most common timeframe.

A position trader is basically an upgraded version of a swing trader, who holds trades for several days to several weeks, capitalising on the various swings of the market.

Position Trading Explained

It’s also the opposite of a day trader, who takes trades for some hours and no more than a day, with the goal of gaining from short term intraday market fluctuations. A position trader has to put more focus on macro fundamentals, as those drive asset prices over the medium to long term and identify the trend direction to trade into.

There’s less work on the trade management side, but nonetheless it requires monitoring on the fundamentals side, because if the reasons suddenly change, the trader can act and close the position.

This is also why a position trader doesn’t rely too much on technical analysis for his/her decisions, but uses it only as risk management tool to identify strong levels and manage open positions.