Which Should You Prefer: Positional Trading or Intraday Trading?

Millions of people trade and invest money every day on public exchanges because stock market investing is one of the most in-demand professions. There are two trading styles one can choose from when first starting out: intraday trading or position trading. You have two options: trade (daily) or wait patiently to reap long-term rewards from these (positional trading). Both of these approaches are frequently used in the market, while intraday trading is more popular among traders.

Intraday trading is a style of trading worth considering if your primary goal is short-term gain. This kind of trading actually entails buying and selling stocks as well as other financial products inside a single trading day. As a result, intraday trading seeks to profit on minute market changes. Positional trading, on the other hand, is a different technique to profit on the stock market. Between day trading and long-term investing, positional trading can be positioned.

Carrying overnight positions is a part of position trading, which is based on risk management, the preferred trading strategy, and the interest time period. Positional trades entail keeping just the shares for a specified period of time, which can range from a few hours to several months, in order to realise profits. When you as a trader want to close out your position is entirely up to you. As a result of the markets' high volatility and perceived danger associated with intraday trading, some traders choose positional trading, which offers a longer time period.

Positional trading v/s Intraday trading

 You may learn to determine which type is the best trading technique for your needs by carefully examining both intraday trading and positional trading.

 Intraday Trading

 Intraday trading, as the name implies, entails starting new positions after the market opens and closing existing positions the same day just before the market closes. Whether you make a profit or a loss, as an intraday trader you are likely to close your position by the end of the trading day. Therefore, intraday trading seeks to profit from little changes in the market.

 Intraday trading is particularly popular since it allows traders to trade in late positions with high leverage and a minimal exposure. You must close out your position fifteen to thirty minutes before the market closes if you are trading with leverage. The broker will automatically square off all positions if no one exits their position. You must pay your brokerage the full amount when you want to convert an intraday trade into a delivery position. These actions must be taken before the market closes.

Only full-time traders should engage in intraday trading because it necessitates being active throughout the whole trading session. Because markets are so unpredictable, your portfolio can start to suffer if you miss your aim. Trading with high leverage is the main benefit intraday trading offers to traders. High leverage or margin trading has the potential for large winnings but also has the risk of larger losses.

 Positional Trading

 Positional trading has grown in popularity in recent years because it avoids one of the major hazards associated with intraday trading: needing to square off one's position by the conclusion of one's trading session. When trading positions, one can keep their positions open for a number of days, weeks, or months, depending on their demands. Positional trading allows one to choose a time period based on the specifics of their deal rather than having a fixed one.

 Positional trading has a larger working capital requirement due to its flexibility in holding positions, but it also has a higher risk-bearing capacity. You could need to put up 50% or more of your capital as margin only to carry futures contracts overnight, depending on who your broker is. A greater stop-loss risk may result from positional trading with higher ranges. For your intraday trade of a Nifty Futures Contract, you can pick a stop-loss that is worth fifteen to twenty points. However, you must use a stop loss that ranges from 40 to 150 points for a positional trade that is held for a long time.

 In a week, intraday trading may result in more than 20 trades. You will only have two to five short-term positional transactions when you use positional trading. In other words, while with intraday trading you may have over 20 trades in a week, with position trading you will only have 2 to 5 short term positional trades. It is clear from one's stop loss that one's risk tolerance with positional trading may be the same or even lower.

 Long-term positional trading is when you decide to keep your position for several weeks to months. Because of the wider trading ranges, a stop loss can carry a risk of up to 200 points here, but the potential winnings are considerably higher, up to 1000 points or even more. In fact, it is advised that before entering the world of long-term positional trading, one should first gain experience with intraday trading and short-term positional trading.

 The Bottom Line

 The following considerations determine which trading strategy is ideal for you. Positional trading involves more capital, thus choosing intraday trading is a wiser choice if you can only afford a small amount. How much risk you can tolerate is another thing to think about. A high-risk trade is intraday. Intraday trading may be more suitable for you than positional trading, which entails moderate to high risks, if you are willing to take on a significant level of risk. Your time frame is the last consideration. A full-time trader should think about opting for intraday trading if they want to be glued to their screen. Positional trading, on the other hand, is a good option for those who want to trade on the side or who cannot devote their entire day to it.