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What Are The Different Positional Trading Strategies


  • An investor looking for substantial returns from the stock markets can use the positional trading strategy or style.
  • This strategy allows the investors to make long-term investments by following a buy-and-hold strategy. 
  • It is opposite to the day trading sessions, as day trading traders focus on buying and closing positions on the same day. 

What does positional trading mean? 

Positional trading means holding stocks for a long period. This aims for high returns by leveraging long-term fluctuations instead of short-term low price movements. This trading strategy best suits the person who has less time to invest in stock market research.  

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What are positional trading strategies in the stock market? 

Following are some strategies that are used by positional traders to make the right trading move. 

Analyzing the historical trends

Similar to other trading strategies, positional trading follows the historical trend analysis of the market. It analyzes the long-term performance of the stock and follows the historical trend to shift their positions. 

Undervalued stock investment

Another strategy used by positional traders is to invest in undervalued stocks or assets, as these stocks can be purchased at low prices. This is how positional traders get high profits by holding low-price stock for a long time. 

Opting for stocks with high growth potential  

Investing early in stocks with high future growth potential allows you to get considerable returns. By betting on stocks' exponential growth over a long period, traders get high returns for their long-term holdings. 

Trading based on momentum 

Positional traders use this strategy to buy stocks that have good upward momentum. Traders then plan to sell them once the momentum starts to decline. 

Advantages of positional trading strategies 

  • Since positional trading is a long-term trading strategy, it allows traders to research well and plan for a long period.  
  • It reduces the burden of regular entry and exiting of positions. 
  • With a long-term strategy, traders buy stocks at low cost and then hold them for a long time. Due to the long-term holding of stocks, traders get higher returns. 

Limitations of positional trading strategies

  • Long holding positions of stock do not always give high returns, sometimes, it leads to missed opportunities. 
  • In positional trading, traders' flexibility gets stifled. 
  • In positional trading strategies, short-term profits are not possible. Therefore, traders need higher capital for investment.

Key Takeaways

  • A positional trading strategy is a better alternative to day trading for individuals who have high capital and patience to hold stocks for a longer time. 
  • Position trading strategies provide many benefits to traders. It helps traders with reduced short-term risks, lower transaction costs, discipline maintenance, etc. 


Related Articles:  Cyclical vs Defensive Stocks: Building a Robust Portfolio | A Guide To Understanding Long Wick Candle In Candlestick Charts | How to Spot and Avoid a Bear Trap in the Stock Market


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