Position Trader

Position traders, sometimes also known as “buy and hold” traders, employ the longest-term trading style out of all trading styles, and may hold their trades for months or even years. This trading approach is reserved for individuals with an excellent understanding of the fundamentals and are very patient.

Fundamental themes rather than technical analysis take the centre stage when analyzing the market, and these position traders seek to understand how economic data will dictate the long-term trends of the instrument they are trading.

Those who prefer to postpone early profits in favor of a greater upside are well suited to position trading. The style requires that you have a thick skin and absolute trust in your analysis so that you can remain calm and weather short-term market volatility when your trades seem to be going against you. However, it is also a style that often requires large capital reserves to withstand several hundred pips of drawdown without receiving a margin call when the market turns against you.

Key takeaways:

  • Identifying a trend is the main task for a position trader.
  • They often make a small number of trades over a year.
  • Because small price fluctuations are not considered relevant, there is minimal monitoring or maintenance needed for such a trading style.