A position trader buys and holds until a trend peaks. A buy-and-hold investor buys for the long term. Position traders may use technical analysis, fundamental analysis, or a mixture of both to form their trading decisions. They also believe macroeconomic factors, general market trends, and historical price patterns to pick investments which they believe are close to go higher.
A position trader buys an investment for the future within the expectation that it will appreciate in value. This type of trader is a smaller amount concerned with short-term fluctuations in price and therefore the news of the day unless they alter the trader’s future view of the position.
- Position traders might be seen as the opposite of day traders. They do not trade actively, with most placing fewer than 10 trades during a year.
- Position traders are, by definition, trend followers. Their core belief is that when a trend starts, it’s likely to continue for a few time.
They identify a trend and an investment which will enjoy it, then buy and hold the investment until the trend peaks. The successful position trader identifies the right entry and exit prices in advance and controls risk using stop-loss orders.
To achieve success , an edge trader has got to identify the proper entry and exit prices for the asset and have an idea in situ to regulate risk, usually via a stop-loss level.