In the financial market, there are two very different approaches to trading- intraday and positional. Intraday trading involves selling securities on the day of purchase. In contrast, positional Trading focuses on capturing more significant price movements over a more extended period— weeks or months.
Understanding these trading strategies is important as they can help traders manage risk and gain the maximum benefits from their securities. Are you also eager to learn these strategies and book maximum profit for your stock market scripts? If yes, then NIWS is here to help you.
NIWS is a well-known stock market institute in Delhi and Jaipur. It is staffed with the best stock market professionals and offers enthusiasts the best stock market courses.
Let’s discuss the difference between intraday and positional trading with our stock market experts and explore which strategy best suits your interests!
Intraday trading, also known as day trading, involves buying and selling financial securities like stocks and shares within the same trading day. Traders aim to capitalise on price fluctuations during the day without the risk of holding positions overnight. Trades can be based on various time frames, including 1-minute, 5-minute, 15-minute, 30-minute, and 60-minute charts, depending on the trader’s strategy.
Potential for Quick Profits- Intraday traders try to gain from the short-term price movements of the financial market. They aim to generate profits through single-day trading.
No Overnight Risk- As in this trade, buying and selling happen within the same day, so there is no risk of keeping the money invested in any securities.
Daily Opportunities- With multiple trading sessions occurring throughout the week, traders have ample opportunities to execute trades and capitalise on short-term price fluctuations across various financial instruments.
High Stress and Time Commitment- Trading requires quick decision-making and continuous market monitoring, which can be stressful for traders. Traders need to dedicate significant hours every day to research and analysis.
Transaction Costs- Since there is frequent buying and selling of securities every day, it leads to higher transaction costs. These are the costs which include exchange fees which are levied by the stock exchanges for carrying out the trade and brokerage fees which are the charges by the broker for executing trades.
Requires Constant Monitoring- The market must be constantly monitored to check fluctuations and prices of shares. Failing to monitor the market can lead to missed opportunities or Losses.
Positional Trading is a long-term investment approach that follows the buy-and-hold strategy. It requires holding security for extended periods, whether days, weeks, or even. The main aim of having security is to gain from long-term movement over short-term situations.
Less Stress and Time Commitment- Positional trading does not require regular or continuous monitoring, so it is less stressful for the traders. Since trades are held for a longer period of time, traders take a relaxed approach and have time to scan the entire market.
Potential for Higher Returns Over Time- Positional Trading aims to capture gain from significant price movement, which helps it achieve higher returns over time. By holding these securities for a longer duration, traders are also saved from short-term fluctuations and dips.
Benefits of Long-Term Trends- Positional traders benefit from long-term market trends. As traders have time to analyse multiple macroeconomic factors that are not apparent in short-term Trading, they usually reap good benefits.
Exposure to Overnight and Weekend Risks- As the positions are held for a long time, they can be affected by market movements and events that occur outside the regular trading time. Any unexpected news or economic fallout declaration can deeply impact the prices of the holdings.
Requires Patience and Discipline- Unlike intraday Trading, where you are in and out within a day, positional Trading requires lots of patience and discipline. Traders should be willing to hold their positions for a long time and avoid the short-term price movements that occur in the market.
Possibility of Tying Up Capital for Longer Periods- As the amount invested in the securities is kept longer, you cannot access those funds. This limits the allocation of funds to any other investment opportunity.
Now that we have all the details regarding what positional and intraday training is, let’s get into the difference between these two strategies to know more!
|
PARTICULARS |
INTRADAY TRADING |
POSITIONAL TRADING |
|
Time Duration |
Intraday trade has to be completed within a single trading day |
This trading can be longer than a day- it can be days, weeks, and months. |
|
Objective |
To earn on intraday price fluctuations. |
To gain profits through long term market trends. |
|
Frequency of the trade |
Multiple trades can be executed within a day. |
Limited or fewer trades can be executed in a day. |
|
Risks Involved |
Intraday market fluctuation is involved. |
Overnight and systemic risks are involved with positional trading. |
|
Returns generated |
At the end of the single trading day. |
Returns are generated only after the position is closed. |
|
Costs involved |
Transaction costs are high since lots of trades are done in a day. These costs includes brokerage cost, taxes, exchange fees, etc |
Cost is not so high due to fewer trades being executed. |
|
Capital Required |
Less capital is required as there is leverage available for traders. |
Capital is tied up in an investment as it has been held for a long period of time. |
|
Analysis technique |
Usually, traders depend on short term price patterns. |
Traders use technical analysis but rely more on fundamental analysis. |
If you are interested in Intraday trading, then-
You are interested in gaining from short-term trades.
You wish to avoid keeping your money tied up in any investment for long.
You have the time to monitor the market and price fluctuations continuously.
You are comfortable with fast-paced intraday trading.
If Positional Trading suits you, then-
You wish to earn through long-term price movements.
You are comfortable with your capital being blocked in an investment for months.
You need more time and focus to monitor the market daily.
You prefer to set up your trades and close the positions in a few days.
To sum up, it is essential to understand what kind of trading you wish to do. This blog clearly explains that intraday trading involves buying and selling investments in a single trading day. In contrast, in positional trading, the investments are kept with traders for longer.
While intraday trading requires quick decision-making and keeps the traders focused constantly, positional trading is flexible and does not require continuous monitoring. Ultimately, the choice between intraday and positional trading depends on individual preferences and circumstances, with each strategy offering unique opportunities and challenges in pursuing financial success.
If you wish to learn more on intraday and positional trading, opt for the stock market courses for traders, or stock market courses for the investors to know more.
Start with a demonstration class.
