In plain English
What Position trading means
Position traders typically focus on the bigger picture, such as macroeconomic trends, interest-rate differences, or long-running technical patterns. They trade less often than swing traders and may accept wider stop distances because they expect larger moves over time. Overnight and event risk remain important.
Why it matters
Longer holding periods change the economics of the trade. Fewer transactions may reduce some costs, but overnight financing, major news events, and trend reversals can have a larger effect when a position is held for a long time.
Example
A trader buys USD/JPY based on an expected multi-month interest-rate divergence and holds the trade for 10 weeks. The final result depends not only on the exchange-rate move, but also on rollover charges or credits over the holding period.
Quick answers
Common questions
Is position trading always based on fundamentals?+
No. Some position traders use fundamentals, others use technicals, and many combine both. The defining feature is the longer holding period.
Can position trading be used in forex?+
Yes. It is common in forex because currencies can trend for long periods and because macro factors often drive those trends.
Sources