Intraday or Positional Trading: Which is Better for You?

What is Intraday Trading?

Purchasing and selling shares or any other financial instruments during the same trading day is referred to as intraday trading or day trading. The aim is to close all the trades before the market closes in order to profit from short-term price changes and market volatility.

 

What is Positional Trading?

Positional trading is a trading method in which an asset is held for an extended length of time, typically weeks, months, or even years. Instead of concentrating on transient changes in the market, the objective is to profit from long-term patterns in it. Position traders frequently start trading positions using long-term charts, including weekly or monthly charts.

 

Intraday or Positional Trading: Comparison and Differences

The main difference between intraday and positional trading is as follows:

• If you are not comfortable with overnight risks in equities, then intraday trading is ideal for you. However, if you are not cut out for the thrill of intraday trading and the very limited time constraint that it entails, then you could opt for a positional trading strategy.
• For intraday trading, the stocks need to be tracked very closely with respect to news flows, charts, breakouts, latest results, etc.; that is, if you do not find it too much of a hassle, you are better off doing positional trading.
• An intraday trader does not capitalize on dividends, splits, bonuses, long-term capital appreciation, etc. While a positional trader has this added advantage.
• If you are of the opinion that discipline, capital monitoring, and so on are challenging endeavors, then intraday trading is not for you. However, intraday trading is much more about patience, and controlling your risks rather than trading knowledge or the ability to forecast market movement.
• Also Intraday traders must use stop losses to reduce losses. There is much more latitude for positional traders since they are willing to pay the full money and accept the delivery of the stock in their demat account.
• Intraday traders have a less procedural approach but focus more on charting news and short-term data indicators. The positional trader has a more fundamental analysis-based approach to the trade but does use charts to determine entry and exit points.

 

Parameters	Intraday Trading	Positional Trading
Time Horizon	Within a single day	Weeks, months, or years
Objective	Capitalizes on intraday price fluctuations	Capitalizes on medium- long-term price fluctuations
Trade Frequency	Executes multiple trades	Fewer trades than intraday
Returns Generated	At the end of the trading day	Over the long term
Costs Incurred	Higher	Lower
Risks	Volatility	Overnight Risks
Indicators Used	Moving averages, RSI, MACD, Intraday Volume, Bollinger Bands	Long-term Moving Averages, Economic Data, Debt-to-Equity, more

 

Conclusion

If you have a small capital, then you can engage in intraday trading because for positional trading, you need more capital investment. As mentioned above, the intraday trading strategy is a high-risk one and it is good for you if you are an investor who is willing to take the level of risk.

Otherwise, positional trading has fewer risks than intraday trading. It is suitable when you are a full-time trader who is bound to the computer screen for most of the day. Also it is important to select the best stock broking platform for better features and tools to do analysis and trading in more easy way with security.