Difference Between Intraday Trading And Positional Trading

Stock market investing is one of the most popular skills. Millions trade on the public exchanges each day and invest in them. There are two options for trading when you start out as a trader: intraday or positionally.You can trade intraday, or you could wait to see if you make a profit in the long-term (positional Trading). These strategies are both common in the market, with intraday trade being preferred by traders.

Intraday trading is a good option if you only want short-term gains. This type of trading allows you to purchase and sell stocks, as well as other financial instruments, within one trading day. Intraday trading is designed to capture smaller market movements. Positional trading is an alternative way to make money in the stock exchange. You can place positional trading between long-term investing and intraday trading.

Positional trading is the trading of overnight positions. It involves taking trades that are determined by risk management, the trading approach chosen, and the interest rate. Positional trades allow you to hold shares for as long as you need, which can range from 1-2 days to several months. This allows one to book profits. You can decide when to exit your trade position. Intraday trading is highly volatile. Some traders may find intraday trading a little risky. Positional Trading provides a more stable time frame.

Intraday Trading and Positional Trading

You can choose which trading style suits your needs by taking a close look at each style: intraday trading or positional trading.

Intraday Trading

Intraday trading, as the name suggests, involves opening new positions immediately after the market opens and closing existing positions the day before the market closes. You are expected to close your positions by the close of each trading day. Intraday trading is aimed at making a profit from smaller market movements.

Intraday trading is popular because traders can trade late positions with high leverage, and very little exposure. If you trade leveraged-based, it is necessary to close your position 15 to 30 minutes before the market closes. The broker will automatically cancel all positions if one fails to exit their position. If you wish to convert an intraday position into delivery, your brokerage must be paid the full amount. These must be done before the market closes.

Intraday trading requires you to be active throughout the train session. This makes it only suitable for full-time traders. Your portfolio could be affected by market volatility. Trading at high leverage is the main advantage intraday traders have. Margin trading, or high leverage trading, has its benefits but also comes with greater risk.

Positional Trade

Trading positionally has been very popular in recent years. It eliminates one the greatest risks of intraday trades: having to close one's positions by the end. Positional trading allows you to keep your positions for as long as you need, whether it's for a few days, weeks, or months. Positional trading allows you to choose your time frame based on the nature and purpose of your trades.

Positional trading is flexible in holding positions and requires more capital, but it also has a higher risk-bearing potential. You may need to have 50% of your capital available as a margin depending on the broker. This is necessary in order to hold future contracts overnight. A higher range of positional trading can lead to greater stop-loss risks. You can use a stop loss that is between fifteen and twenty points to trade intraday Nifty Futures Contracts. A stop loss of approximately 40 to 150 points is required for long-term positional trades.

Intraday trading can allow you to trade more than 20 times per week. Positional trading will allow you to only have 2-5 short-term positional positions. In other words, while you might have more than 20 trades per week with intraday trading, positional trading will allow you to only have 2-5 short-term positional trades. It is obvious that positional trading may be more risky than intraday trading, depending on the stop loss.

Long-term positional trading is when you decide to keep your position for a period of time, such as a few weeks or months. Because of the longer trading ranges, the risk of losing money can be as high as 200 points. However, the rewards of long-term positional trading will be higher -- up to 1000 points. It is recommended to get involved with intraday and short-term trading before moving into long-term trading.

The Bottom Line

These factors will help you decide which trading type is right for you. Intraday trading is better if you don't have the capital to invest in positional trading. You should also consider how much risk your tolerance can handle. Intraday trading is high-risk. Intraday trading is better suited for you if you are willing to take on high risk. Your time frame is another important parameter. Intraday trading is best for traders who want to be glued to their screens. Positional trading is for those who wish to trade side-by or can't dedicate their whole day to trading.