Intraday and positional trading are two very popular ways to approach the market. The traders use a different variety of strategies to trade in the stock market including these two. It’s just some traders prefer to enter and exit trades within a single day while others prefer to hold on to their positions for weeks and months. But, it is not like a trader is limited to only one trading style. You don’t have to choose one of them. On the contrary, a trader can choose both options for the trading, if he/she has a trading account. But, it is not about the facility you are getting. In the stock market, the trading style and your personal behavior play a major role. For example, if you dream of getting high returns with no risk then day trading or positional trading is not your type. Instead, you should invest for long-term.
Any by long-term we are not saying invest directly in stocks or debt mutual funds for 15-20 years. There is a way to invest capital according to the different trading time frames.
Different Types of Trading & Time Frames
|Intraday Trading||Day Only – No Overnight Positions|
|Position Trading||Months to Years|
|Swing Trading||Days to Weeks|
|Scalp Trading||Seconds to Minutes|
In trading, you must’ve heard: first to choose the right stocks for intraday trading and timely enter and exit the trade to make the most out of it. So, ultimately, it is all about the timing! When it comes to that you need to make sure you choose the right way to trade, according to your trading style.
Read more: Free Intraday Trading Tips
In this article, we will discuss, “which is better, intraday trading or positional trading?”
Intraday Trading vs. Positional Trading
It all comes down to intraday trading and positional trading. So, what’s gonna be? You know most new traders want to become day-traders. It is because they all are wishing to generate profits on a regular basis from day-trading. Even the brokers are pushing them to become a day-trader. Although the hidden motive is, more someone trade, the more commissions they get over trades. Although day trading can be profitable it doesn’t mean it would be profitable to all traders. The same thing can be implied for positional trading.
To get a better understanding, let’s discuss both styles one-by-one.
As the name suggests, the intraday trading is a style of trading where one opens and closed position on the same day. So, unlike swing and position traders, an intraday trader does not hold any positions overnight and all traders are closed at the end of the trading session. A day trader has a mindset of buying stocks not to invest but to trade for the purpose of earning profits. Usually, intraday traders use technical analysis to use for the advantage of intraday price fluctuations.
In intraday trading, the large price moves are uncommon and the trades held in the period of minutes and hours, so most day traders rely on frequent small gains.
- As we mentioned, large price moves are uncommon in intraday trading, so the trader aims for a small target for the short duration to make huge profits.
- In intraday trading, the brokerage is also low as compared to positional.
- No delivery charges in intraday.
- To get good returns, you don’t need to invest big capital. Instead, you can start trading with a very low investment.
- Stating the obvious but in intraday one can make the money faster than in positional trading.
- “Experience” is what most needed to do intraday trading. Unfortunately, most investors and traders lack this kind of experience and despite this, they enter the trade and lost their capital.
- If a trader who is a working employee and planning to trade in spare time then it would be very difficult to manage both day-trading and work. It is because intraday trading is very time-consuming. And since it is of short duration, it is very difficult to manage, if you have a full-time job.
- You need to know that intraday trading requires constant monitoring of any fluctuation on stock prices. Day-traders have to sit on the computer for hours which creates more mental pressure and stress. Plus, it is highly addictive that explains why brokers love day traders so much. A small mistake can turn into a huge loss.
Positional trading is the style of trading which has the longest time frame, generally, spans a period of months to years. On one side, intraday traders who solely depend upon technical analysis herein positional trading, a trader use a combination of technical and fundamental analysis to make trading decisions. Most positional traders refer to weekly and monthly price charts in market evaluation and avoid short-term price fluctuations in order to profit in longer-term periods. It is the closest thing to the investment.
- Unlike intraday traders, the positional traders are sure about the profits and aim bigger target for long period of time.
- If you are aiming for bigger profits then you will have to pay more brokerage too. Yes! It is the downside of positional trading that positional traders have to pay more brokerage in positional trading as compared to intraday trading.
- In positional trading, a trader may not make fast money but can get assured return but after a long duration of time.
- Compared to intraday trading, the positional trading is less risky and a trader can manage his ups and downs very easily.
- “Experience” still needs to invest in positional trading. One needs to study the ups and downs of the market and make decisions, However, most investors don’t have the patience needed to trade for a long duration of time.
- In positional trading, the traders have to bear the delivery charges.
Final Thoughts: –
In a nutshell, we can say that both intraday and positional trading are two different styles of trading. You can’t compare one with another. Instead, you should pick the one which suits your financial goals. “Are you planning for quick money or assured money?” You need to clear your thoughts and make a decision accordingly.
As a trader, you must consider some important factors while picking the trading style that suits you best, including:
- Amount of time;
- Level of Trading Experience;
- Risk Tolerance, and
- Account Size.
But, don’t worry! You gotta understand it takes time and experience to find out the style of trading.
Hope, you find this article helpful and get the information you were looking for. Nevertheless, if you have any query or would like to add something then doesn’t forget to mention in the comment section below.
Note: All information & data provided in this article is for the educational purpose as well as to give general information on the finance & economy, not to provide any professional advice or service. Views & opinions are not biased against the company and do not affect any official policy or any other agency, an organization within the content.