Here we will discuss on a most interested trading concept comparison – Swing trading vs. Position trading . You may be aware that there are different trading styles . Here we are picking up comparison of just two different styles of trading . That is a comparison between Swing Trading Vs Position trading .

What is trade ?

Before we begin with the cross comparison between Swing Trading Vs Position Trading , let us take a look at the basic concepts like –

What is trade

Trade is nothing but simply an act of exchange of commodities and services in return for money .

Trader Vs Investor

Here let us begin the discuss by pointing out the key differences between trader and investor . Also this would be well understood by understanding Trading Vs Investment .

Investing Vs Trading both differs even though it sounds similar . Trader and Investor participates in financial market but their approach and goals varies.

Trader looks for profit frequently in every month but an investor is happy with the annual return of same percentage.

Aim of both investment and trading , is to gain profit but the profit creation approaches of a trader and an investor really varies.

Trading is a frequent exchange process , i mean selling and buying happens so frequently but investment is a period of time process to get profit .

Several people who become interested in trading are firstly introduced to the financial markets through the process of investing. The main purpose of investing is to build wealth slowly over a period of time. This is generally accomplished through a buy-and-hold approach for e.g.: investing on stock or mutual fund etc and monitoring the price to fluctuate over the investment period of time.

Trading profits are achieved basically through:

• Buying low and selling high
• Short period process and the time duration of trading is based on the style of trading .

Trading Styles – Trader’s Style 

There are mainly four different trading styles that exist but if we look deeply we can find basically Trader’s style is counted to five .

So there are totally 5 trading styles .

• Position Trading
• Swing Trading
• Day Trading
• Scalp Trading
• High frequency Trading

Trading Style	Time Frame	Holding Period
Position Trading	Long Term	Months to Years
Swing Trading	Short Term	Days to Weeks
Scalp Trading	Shortest Term (Very short)	Seconds – Minutes
Day Trading	Short Term	Day only

The chart explains the Holding time period and time frame of each trading style in a way how each trading style differs. One should know about the pros cons of each trading style to choose the Ideal trading style that suits you .

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Here we will take the comparison of two primary trading styles – Swing Trading Vs Position Trading

Swing Trading Vs Position Trading – Pros and Cons

On the comparison of two primary trading styles – Swing Trading Vs Position Trading , first let’s understand what is position trading and swing trading .

Position Trading

Before we compare Position Trading Vs Swing trading , let us understand what are these trading styles individually.

So , What is Position Trading ?

Based on stock trends , position trading focus upon the intermediate trends .Position trading is an approach in which the trader either buys or sells contracts and holds them for an extended period of time. Position trading is also known as ‘trend trading‘. Positions can be open for a few days, a few weeks, and a few months or longer than that at times. They are also held during periods of minor retracement with the expectation that they will eventually continue trending in the desired direction.

Position trading is generally long term , but the investors always keep a close look the price chart and fluctuations regularly . The fall in price over short period is generally ignored. Position traders are known to be investors with a combination of fundamental and technical analysis .

Now let’s take a look at the pros of Position trading before comparing Swing Trading Vs Position Trading.

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Position Trading Pros 

• Position trading is the easiest to learn also it is estimated that up to 25% of position traders learn to become profitable easily.
• Position trading is less stressful as compared to swing trading.
• It is Easier to become successful even if you have less start up capital.
• It is easier to predict the market as follow and observe the market trend on regular basis.

Position trading is the most profitable type and also less time consuming than the other trading.

Position trading Cons

• As positions can be highly leveraged and trades remain open for extended periods of time it gets difficult to get in regular benefits of interest.
• There is a build in risk associated with position trading as there can be a major fluctuations over night in the market.
• In position trading Money can be tied up for an extended period of time that can stop entering into new positions as they arise.
• Because of the duration of time involved in position trading, traders can experience major decline in an investment with the belief that it will turn around and start trending back soon in the needed direction.
• Psychologically this can have a very harmful effect.

Swing Trading

Swing trading is a short-term plan used by various traders so as to buy and sell stocks whose technical analysis that indicates different trends like an upward or downward trend in the near future which last usually one day to two weeks.

Swing traders are never bothered about the long term value or fluctuations of a stock . They always look for the near term of the stock and closely watch whether a stock can rise or fall using technical analysis.  

Swing Trading Pros 

• It doesn’t have to be a full time job and it is for long term with long time duration. Any person with enough capital for investment and accurate knowledge can try swing trading.
• One can sit back and relax as he/she doesn’t have to keep their eyes on it as swing trading doesn’t require continues monitoring or observation.
• Trades takes time to work out in that situation it is best to keep a trade open for a few days or weeks so that it results in higher profits than trading in and out of the same security several times in a day

Swing Trading Cons

• It is unpredictable as No wonder how much alert you be in the day time but markets can make a quick move overnight while you’re sleeping hence the market is closed. If in case such a moves overnight is against your trade, it can be a mean arousal after you check your position the next morning.
• You hold up your capital for longer duration with swing trading as compared to day trading.

Both the trading style are good and bad in their own ways . On a comparison of Position Trading Vs Swing trading,  one cannot directly advocate that this style of trading is the best .

Because the final decision of every trader is influenced by certain trading factors like – risk tolerance , time , personality ,experience in trading , size of account etc.

So you can let us know which is your preferred style of trading – Swing Trading Vs Position Trading or something else !!!