The Advantages and Disadvantages of Position Trading 
The Advantages and Disadvantages of Position Trading
by InformedTrades
Video Lecture 74 of 77
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Date Added: May 7, 2017

Lecture Description

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A lesson on the advantages and disadvantages of position trading for active traders and investors in the stock, futures, and forex markets.

In our last lesson we looked at the advantages and disadvantages of the second most popular style of trading, swing trading. In today's lesson we are going to look at the third and final category of trading, position trading.

Position Trading, which is also referred to as trend trading, generally involves holding a position for three to six months to capture a fundamental change in the value of the financial instrument that is being traded. As this is the case position traders will generally be more prone to integrating at least some fundamental analysis into their trading, than will day and swing traders.

Probably the biggest advantage to position trading is it generally involves the least amount of time of the three trading styles. After they have spent the significant time necessary to learn about trading in general, many good position traders will spend just several hours a week analyzing the market and making their trades. As they are holding positions for long periods of time good position traders have their stop loss and profit targets in place before making the trade, requiring that the trader only monitor the position to make sure nothing significant has changed since his original trading decision.

The second major advantage that I think many traders would site about position trading is that because you are in positions for long periods of time with wide stop loss orders, your positions have room to breath and are much less likely to get stopped out because of random market noise than with the other two styles.

As we learned in our lesson on Swing Trading, holding positions over longer time frames generally requires wider stop loss orders. While as we have just stated this is an advantage from a market noise standpoint it is also a disadvantage from a larger average risk per trade standpoint.

The second main disadvantage that I think most traders would site is that position traders miss out on many of the shorter term opportunities that day traders and swing traders can use to amplify their profits. This is not only true from a length of trade standpoint but also from a capital standpoint. Because position traders hold positions for long periods of time their trading capital is also tied up in those trades for longer periods of time, restricting them from taking advantage of as many opportunities.

We are going to go into a bit more detail on how to choose the style of trading which is best for each trader in our lesson on the trader's business plan, but you should now have a good understanding of what each style entails. The last thing that I would like to point out here is that often times different styles work better in different types of market conditions. With this in mind many traders will learn a bit about each of these styles so they can place longer or shorter term trades depending on the market conditions at the time.

That's our lesson for today, in our next lesson we are going to begin to take a look at the different markets that are available to traders so we hope to see you in that lesson.

Course Index

  1. Intro to Technical Analysis
  2. Introduction to Dow Theory
  3. Second 3 Tenets of Dow Theory
  4. How to Read Stock Charts
  5. How to Trade Support and Resistance
  6. Multi Time Frame Analysis
  7. Introduction to the Double Top and Double Bottom Charting Pattern
  8. How to Trade Double Tops Like a Pro
  9. How to Trade the Head and Shoulders Pattern Part 1
  10. How to Trade the Head and Shoulders Pattern Part 2
  11. How to Trade the Wedge Chart Pattern Like a Pro Part 1
  12. How to Trade the Wedge Chart Pattern Like a Pro Part 2
  13. How to Trade the Flag/Pennant Patterns Like a Pro Part 1
  14. How to Trade the Flag/Pennant Patterns Like a Pro Part 2
  15. How to Trade Triangle Chart Patterns Like a Pro Part 1
  16. How to Trade Triangle Chart Patterns Like a Pro Part 2
  17. Learn to Trade with Technical Indicators
  18. How to Trade Moving Averages Like a Pro (Part 1)
  19. How toTrade Moving Averages Like a Pro (Part 2)
  20. How to Trade the MACD Indicator Like a Pro (Part 1)
  21. MACD Indicator: Trade it Like a Pro (Part 2)
  22. How to Trade the Relative Strength Index (RSI) Like a Pro
  23. How to Trade Stochastics Like the Pro's Do
  24. The Difference Between the Fast, Slow and Full Stochastic
  25. How to Trade Bollinger Bands - Stocks, Futures, Forex
  26. How to Trade the Average Directional Index (ADX)
  27. How to Trade the Parabolic SAR
  28. How to Trade Candlestick Chart Formations Part 1
  29. How to Trade Spinning Tops and Doji Candlestick Patterns
  30. How to Trade the Bullish/Bearish Engulfing Candlesticks
  31. How to Trade the Hammer Hanging Man Candlesticks
  32. How to Trade the Morning/Evening Star Candlestick Pattern
  33. How to Trade the Inverted Hammer/Shooting Star Patterns
  34. Why Most Traders Lose Money and The Solution
  35. Why Traders Hold On to Losing Positions
  36. Two Trading Mistakes Which Will Destroy Your Account
  37. Herd Mentality is the Psychology That Leads to Big Trading Losses
  38. Profit Expectations: What Millionaire Traders Know
  39. How to Join the Minority of Traders Who Are Successful
  40. How To Determine Where to Put Your Initial Stop Loss Order
  41. How to Use the Average True Range (ATR) To Set Stops
  42. How to Up Your Chances for Profit When Setting Stops
  43. How to Reduce the Chances of Being Stopped Out on a Trade
  44. How Successful Traders Use Indicators to Place Stops
  45. Stop Your Mind From Causing You to Take Profits Too Soon
  46. How To Use Trailing Stops
  47. Why Position Sizing is So Important in Trading
  48. Why Fixed Position Sizing Is Not the Best Way to Trade
  49. Trading The Martingale and Anti Martingale Strategies
  50. How to Set Trade Position Size for Maximum Profits
  51. Maximize Trading Profits with Correct Position Sizing 2
  52. Fundamental Analysis and The US Economy
  53. A Simple Explanation of the US Economy for Traders
  54. Simple Explanation of The US Economy For Traders Part 2
  55. The Business Cycle and Fiscal Policy - What Traders Know
  56. How Interest Rates Move Markets
  57. What Traders Know About Interest Rates Part 2
  58. What Traders Need to Know About The Structure of The Fed
  59. How the Fed Changes Interest Rates
  60. How to Determine When the Fed is Going to Change Rates
  61. Why Markets Move Ahead of Interest Rate Announcements
  62. How to Trade the GDP Number (Part 1)
  63. The Components of the Gross Domestic Product (GDP)
  64. Intro to Trading Non Farm Payrolls (NFP's)
  65. Trading the News - Economic Numbers - Retail Sales
  66. Trading the News - Economic Numbers - ISM Manufacturing
  67. The Producer Price Index (PPI)
  68. The Consumer Price Index (CPI)
  69. Trade the News - Existing Home Sales Index
  70. How To Interpret the Consumer Confidence Index (CCI)
  71. How to Interpret the Index of Leading Economic Indicators
  72. The Advantages and Disadvantages of Day Trading
  73. The Advantages and Disadvantages of Swing Trading
  74. The Advantages and Disadvantages of Position Trading
  75. How to Keep a Trading Journal
  76. The Most Important Attributes of a Good Trading Journal
  77. The 20 Components of a Successful Trading Plan

Course Description

This is a series of 77 short video lessons meant to give traders an introduction to the basics of trading as well as the components necessary to develop a profitable trading plan.

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