What is positional trading in stock trading?

Positional trading is a form of investing where investors hold their positions for a long term with the expectation which will be profitable. In stock trading, only a few investors are succeeding because some are not consistent with one strategy. In the stock trading consistency is the key to gain a good profit.

positional trading

First of all, you will understand what is positional trading. In this kind of trading, a trader has to hold the stock for a certain period of time like days, months or years. This trading is much more like long term investment where a trader has to remain invested till their expectation turn into real profits.

In positional trading, the positions are usually based on long term investment or macroeconomic factors. These traders operate in every market like ETFs, stocks, Forex, futures etc.

Earlier trading was just simple like buying and selling stocks but now it is different. The technical analysts observe the movements in the past price and by which they predict the future price of stocks, just by checking the average you can understand the market trend for stock. Before moving further you should have a proper understanding of trends which is very essential.

Positional trading Indicators and their importance

These indicators analyse the market, whether it is moving up-down and how far a price swing.

Relative Strength Indicator (RSI):  This indicator compares the recent gains and losses for a specific period of time by which you can know the change of price movements. This indicator determines the proper time for profit booking.

For positional trading, traders should remain constant with one mindset. They should not be confused in many trading experts’ advice because doing this they lose their consistency, which is not good in this trading.

In this trading, you have to choose a good trading indicator by which you can gain a good profit. Before choosing it, you have to know how your indicator works, what kind of calculations does it make.

Apart from RSI, many other indicators are also available like channel or bands, moving average. A mean average indicator is used to see overextended markets for mean reversion and channels are used to see the rhythm of the market that is it breaking or not.

In a time tested strategy the chances of gathering profit increases phenomenally. In positional trading, you have to be in a long term perspective and you have to ignore the short term market uncertainty and should have a lot of patience. Traders are less disturbed with short term fluctuations unless impacts big difference in stock.

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