Position Trading: Building the Winning Long-Term Strategy

Here is the long-awaited finale of the Trading Strategies cycle, concluding with a long-term strategy overview. Some say it is the easiest style, too often chosen by newbies who end up ruining their fortunes. Others say that positional trading is the way of the wise, those with a knowledge of market extrapolations. Whichever YOU are, what should YOU do to be successful in the long run? Let's discuss.
 

Long-term trading strategy, also known as positional trading, is a type of investment strategy in which a trader holds a position in an asset for an extended period of time: not for days or a few weeks, but for several months or even years, which is what distinguishes it from swing trading or day trading. This approach allows traders to ride out short-term volatility and focus on market fundamentals and long-term trends.

The main benefit of a long-term trading strategy is that it provides traders with more stable returns over time. Unlike other trading styles, which can be unpredictable and risky (especially with leverage), long-term trading allows traders to build wealth over time by taking advantage of compounding returns. Long-term trading also allows traders to avoid the stress and time commitment of day trading or swing trading: you will definitely spend less time at your computer and more time with your family! Double profits!

The extended time range makes many people thing that long-term trading fits only the master of the market, able to correctly analyze the market for years ahead, based on their decades of experience. Others confuse the apparent ease of this approach with simplicity, especially those who are new to the market. All are right in their own way, but it is important to remember that the market always grows in the long term, and the whole economy follows the multi-decade cycles. And the key question is: how long are you ready to wait?

As for the other tips for successful long-term trading, they are not so different from the swing trading tips, except that here you rely heavily on fundamental analysis, which involves analysing the financial health of a company or asset to determine its long-term potential. Traders can use various metrics such as earnings, sales growth and market position to assess the strength of a company or asset.

Asset selection is another crucial tool here, as Forex and third-tier stocks are not going to benefit the trader here. Bonds, commodities (especially those that are naturally limited and decrease in amount from year to year: food, energy) are the favourites here. After all, Warren Buffet is the person we usually think of when we talk about 'successful investors', and he is the one who plays long.

A small but important note: many people confuse long-term trading with investing, and indeed they have a lot in common. But the main difference is that when you trade, you are still completely on your own and only you are responsible for the results. Therefore, you keep all the profits. At Grand Capital, we offer our clients portfolios that combine the benefits of investing and trading in one.

However, there are disadvantages to position trading. The main one is that it requires a considerable amount of patience. This can be a challenge for some traders who may be tempted to sell their positions during periods of market uncertainty. Then, the article about day-trading is right for you. And position trading pays off for traders looking for a more stable, less time-consuming and more predictable style. Just like all the other strategies we have discussed in our cycle. It all depends on you, just keep cool and keep trading.

Building your strategy is easier when there are enough assets to choose from. At Grand Capital we offer around 500 trading instruments for your perfect portfolio, as well as six real trading accounts. Last but not least, with 16 years in the market, we are also the long-term players, and hundreds of thousands of clients are also an argument.

Remember, our Client Support team is always ready to navigate you through this variety of possibilities, so, in case, contact it in your Private Office, in the Online Chat (bottom right corner of the website) or at [email protected].

And good luck in your short-, mid- and long-term trading!