Introduction
- There are various trading strategies that have evolved in the share market over time which cater to different types of trade requirements.
- Day traders commonly use swing trading, as it is a short-term trading strategy.
- While position trading is a long-term strategy, investors use with a more relaxed approach toward investing.
- Swing trading allows traders to trade on market momentum and make a profit from short-term fluctuations by using technical analysis.
- The potential trading strategy allows investors to use fundamental analysis to identify historical trends, undervalued stocks, or high-growth potential stocks for long-term investments.
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What is swing trading?
In swing trading strategy, traders spend many hours daily identifying trends, chart analysis, backtesting, etc. Therefore, this trading style requires several hours to adjust or monitor stocks as per the market movement. The swing trading strategy involves more transactions as traders open and close their positions multiple times.
This trading requires frequent trading, as traders hold stocks for short periods. Positions are opened and closed many times within the given time period, a week or month. It allows traders to have more trading opportunities by taking benefits of short-term price fluctuation of stock.
What is positional trading?
Position trading involves holding stocks for a long time, due to which positions are not frequently opened or closed. Traders hold stocks for long durations, ranging from months to years.
This strategy is less time-consuming, as investors do not monitor the stocks daily. They monitor their trades every few weeks or months to check the trends and price fluctuations.
In positional trading, the volume of transactions is low, as traders do not enter or exit their positions very often. It provides very few trading opportunities, as traders or investors hold stock for a long duration.
Which strategy to choose: Swing trading or Position trading?
- Both trading strategies are suitable for different situations and different traders.
- To use swing trading, begin with a small investment to get quick wins and fast account growth. This will create a great impact while changing positions in trading.
- The positional trading strategy is better for those with huge capital and less time to invest in stock market analysis.
- Though both these strategies generate decent profits, the swing trading strategy has the potential to generate faster profits and rapid growth compared to positional trading.
The bottom line
- Opt for the strategy that fulfills your profit speed, works best for you, and suits your trading goals.
- Swing trading involves short-term price swings, where traders must change their positions in days or weeks.
- Whereas position trading involves the long-term holding of stocks for months or years with significantly less fluctuation in price.
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