There are four easily identifiable styles of trading: scalping, day trading, swing trading and position trading. The main difference: timeframes. In this occasion, we would like to focus on the latest two: swing trading and position trading.
Swing Trading
Swing trading can be considered a medium-to-long term trading style. For that reason, a swing trader would be holding its positions for a few days before closing them.
This trading style is suitable for those who are not ready to operate on daily basis and would rather opt for a more balanced technical/fundamental analysis and strategy.
For example, if you are ok with the idea of managing your own investment but still need to take care of a 9-to-5 job, family and so… then swing trading allows you to do everything. You can monitor your investments whenever you have time, maybe a coffee break or during breakfast.
Swing trading is just it… swings. The idea is pretty intuitive: ride the swing up or down depending on your positioning. It is important to understand that holding positions for a few days mean exposure is higher and therefore stop loss/take profits should also reach for higher limits.
Position Trading
If you don’t want to even check out your investments every week, then you have to consider position trading, which allows you to keep positions running for months to years.
Of course, the level of investment should justify it. Usually, position trading is better suited for large investors as they have the ability to face stronger market swings without going bankrupt or hitting margin calls. Keep that in mind before choosing this trading style.
Position trading is mainly about fundamental analysis. You need to know how things will develop in the future, or at least be pretty good at forecasting changes in politics, monetary policy, etc.