Position trading

The longest of the conventional trading styles, defined by holding period rather than by method. Its neighbours are swing trading, measured in days to weeks, day trading, which closes within the session, and scalping, measured in minutes. A position trade is usually built on a view about policy, the economic cycle or a company's earnings, with chart levels used for entry and exit rather than for the view itself, and it is held through the intervening noise by design.

The cost profile inverts as the horizon lengthens. Dealing costs are paid rarely, so the spread and commission that dominate a scalper's arithmetic become a small share of the total, and financing takes their place: an adjustment applied every night for as long as the position is open, derived on a currency position from the interest rate differential and capable of changing direction mid hold when a central bank moves. Share and index contracts add dividend adjustments as constituents go ex-dividend. The margin requirement applies throughout rather than at entry, so a requirement raised while the position is open changes the collateral held against it without anything happening in the market.

A long horizon does not soften the arithmetic, and this is where the style is most often misread. Losses continue to be calculated on the full contract value throughout the hold and are not limited to the amount deposited, positions are marked to market continuously rather than at the end of the view, and an account can be closed out on an intermediate move that the eventual outcome would have reversed. Practitioners disagree about whether the style calls for wider protective levels or smaller sizes, and the arithmetic does not settle it, since the two are substitutes inside the same risk calculation.