Each trader has an opportunity tochoose the form of trading from the two key options available on the sharemarket, i.e., Intraday and Positional. There is no need to pick one of themasthe trader can choose both options with his single Demat account fortrading. But according to his investment, the trader must choose his form ofexchange, which will make him wealthier in the market.
Significant differences betweenIntraday and Position trading.
1.As the name Intradayitself suggests, you never have overnight positions in intraday trading. Inother words, when the market closes, all open positions are taken out and youwill have a net profit or net loss depending on your trading’s. Whereas Inpositional trading, depending on your trading process, risk management strategyand the time frame of interest, you can carry or hold onto overnight positions.As the simple reference span to book earnings, you could be positional with a1-2 days’ time frame or you could hold trades for a week or months long time.
Intraday trading
2.Intraday trading isbasically the type of trading where after the markets open in the morning ofevery trading day, you open trading positions and close them until the end ofthe day. In 24-hour markets, at the end of the trading day, you actually close tradesand positions. Price movement in an intraday transaction wouldbe afraction of the regular average range traded. For example, if the daily rangeis 100 points, your trade can aim 20-50 points. The ranges are proportional tothe time of interest and would be multiples of these numbers in a positionalexchange. On the other hand, Positional trading is that type of trading wheretraders are prepared to hold positions as long as one or more days, weeks ormonths are necessary. The time frame relates to the preference of traders forpositional trading.
3.When it comes to carryingcertain position for just a few days, a short-term positional trader can carrypositions. Coming to long term for days, weeks or months, a long-termpositional trader can carry positions.
4.The type of trading thatyou use could be the same. What is evolving is the needs for working capitaland risk power. Generally, these are much higher. Therefore, you would probablyneed 50 percent or more working capital for a simple positional trade as amargin to carry forward futures contracts overnight.
What is Positional Trading?
5.Since the positionaltrading ranges are much larger than the daily ranges, the risks of stop losscan be greater than intraday risks (although not always necessarily).
6.If a trader has hugecapital and lots of patience it is vital for long term trading. On the contraryif a trader is impatient, he can opt for intra-day trading.
7.As a comparison toPositional trading brokerage, intraday trading brokerage is less.
8.Compared to Positionaltrading, a trader can make money in intraday trading in a quicker way.
9.It is necessary for anintraday trader to be efficient and have a close look on the market to executeorders quickly and book earnings quickly because there’s no much time. But atrader trading in positions can take time to analyze and understand the markettrends and accordingly move to generate profit.
10.Full time traders can optfor Intra-day and Position trading but office goers who can’t sit in front ofthe screen for the whole day cannot opt for Intra-day trading.
Long term positionaltrading
You trade like an investorwith a horizon of weeks and months in this method of trading. The stop lossrisk levels can go as high as 100-200 points because the trading ranges arewider, while the incentives can go from 200-1000 points or more. Once you havetasted success in the above-described intraday or short-term positionaltrading, you can then consider this form of trading.
Pros and cons of Intraday trading
Benefits ofIntraday trading
·For a short period of time, traders aim for a small targetand can make big profits.
·Intraday uses a form of trade very frequently, because thevolume of the trader is high, so that the trader can easily position a trade.
·Brokerage: As a contrast with Positional, brokerage is low inintraday trading.
·A trader can make money in intraday trading in a quicker way.
·A trader can start his trade with a low investment.
Cons
·A trader requires adequate guidance and knowledge beforetrading in Intra-day.
·Intraday trading, because of the short length of the day,takes a very long time. If you have a full-time job, it is very hard to handle.
·The handling of intraday trading is very stressful. Sinceconcentration is needed.
·Intraday trading is very dangerous, a big loss can resulteven from a small mistake.
Pros and cons of Positional trading
Benefits of Positional Trading
·It is less risky as compared to Intra-day trading
·They are capable of producing higher percentage returns
·They offer a range of strategic choices.
Cons
·Before investing, traders have to do too much research. Sincethe trader will be investing for a long time.
·Traders need to wait a long time to get their investmentrewards or gains.
·He has to think about his investment if the trader hasinvested in the wrong share. And it'll result in bringing stress on a trader.
