A Brief Guide to Position Trading

With the advent of the crypto industry, there are several popular trading strategies that individuals can use along the process. Traders can gain from this strategy whether they hold their cryptocurrencies for the short or long term. One of these well-known and efficient strategies is Position Trading. If this piques your interest, this article can help you by providing a brief guide and insights regarding this.

Definition of Position Trading

Position trading refers to a usual trading technique where traders hold a position over time. Typically, it usually lasts over a few months or years. Individuals who apply this ignore the short-term valuation movement in the crypto market. In this way, it makes them in favour of profiting and pinpointing from a long-term trend. Moreover, this kind of trading strategy most closely takes approbation in investing. However, buy-and-hold crypto investors have limitations due to the crucial difference. 

Several trading strategies are emerging in the crypto industry. Nonetheless, the position trading technique efficiently encompasses the extended time frame. Hence, there are also significant opportunities, including potentially gaining better profits. There are also lots of advantages in applying for position trading. It entails capitalising on more meaningful movements, liquidating positions, and minimising the noise of the crypto market. On the other hand, there might also be an increase in inherent risk. 

Features of a Position Trader

A position trader is a type of trader who holds cryptocurrency for an extended period. Furthermore, individuals can obtain work for a few months or years on average. Position traders do not necessarily worry regarding short-term fluctuations. Individuals concern themselves with processes where they can significantly impact the long-term outlook of their current position or with trend followers. However, most position traders usually do not trade regularly. They surpass a long-term buy-and-hold procedure over time. 

Position traders typically employ a combination of technical and fundamental analysis to make trading choices in cryptocurrencies. Other than that, they also consider some factors, including the historical patterns and the current market trends. Good position traders can efficiently identify the exit points and entry. In this way, they will know when to apply the stop-loss order. Trading might be tricky, to avoid making irrational decisions, make it a habit to research and analyse before making a move. The BiteMyCoin website is a nice source of information for that purpose, as the team there creates insights and forecasts regarding the crypto market.

Position Trading Techniques and Strategies

Position traders typically utilise technical and fundamental research to assess possible value movements in the cryptocurrency market. Here are some of the position trading strategies.

• 50-Day Moving Average Trading: The moving average trading indicator is an efficient technical gauge that position traders use. It might be because 50 is a factor of both 100 and 200, acquiring equivalent moving averages that reveal significant long-term trends. Moreover, it means that when the 50-day MA aligns with the 100- and 200-day MA signals, it might signify the start of a new long-term trend, making it a good indicator for position traders. 
• Support and Resistance Trading: Support or resistance levels can indicate where the price movement of an asset is heading, signalling to position traders whether to try and open a position on specific digital assets. A support level refers to the value of an asset that has not traditionally fallen lower. Moreover, short-term support levels can coexist with historical support levels lasting years. On the other hand, the resistance level refers to the price of a security that it has consistently been unable to break. Position traders will utilise long-term resistance to close out positions. It is for the commodity to decline following reaching this milestone. Likewise, if they predict a long-term trend to begin at this point, they may buy in near support levels.
• Trading breakouts: The application of trading breakouts can be significant for position traders since they can use them for the next move in the crypto market. Individuals who implement this strategy usually attempt to open a position at the beginning or early stages of a current trend. In the crypto industry, a breakout refers to a value of an asset that moves outside defined support or a sort of resistance level. Moreover, it acquires an increased volume for opening a long position due to the security breaks. It is also applicable whenever there is a short position and the security breaks below support. However, traders can successfully trade breakouts when they are confident in analysing periods of resistance and support. 
• Pullback and Retracement Technique: A market pullback refers to a brief dip or modest reversal in the price trend of an asset. When a short market dip occurs, individuals usually implement this technique. Other than that, pullback traders seek to profit from the market’s pauses. The utmost goal behind this strategy is to purchase low and sell high before the crypto market quickly drops. Right following, traders then buy once more at the new low. If done correctly, a trader can profit from a long-term trend. Aside from that, they will also avoid potential market losses by selling high and purchasing on dips.

Instruments that Position Traders usually Trade

The application of position trading serves as a style of trading that is usually akin to investing. Individuals aim to profit from long-term investments and are more interested in the crypto market with clear trends. Here are some of the instruments that position traders usually trade. 

• Shares CFDs: Position traders usually trade shares in companies. However, when the crypto market is tumultuous, digital assets are more prone to stable trends. Despite this, the fundamental analysis still serves as a basis in the accession of traders to the highlight opportunities. 
• Commodity CFDs: Commodities are typically similar to shares. Thus, they are more prone to longer-term trends, including cryptocurrencies and currency pairs. However, it can be risky sometimes, but the stability is even faster. 
• Indices CFDs: Indices are compression of several companies that tend to be in a geographical area. It is a good indicator for position traders since it allows for less noise and trends. 
• Cryptocurrency CFDs: Position traders still acquire cryptocurrencies as their value rises considerably. However, individuals shall settle for planning and taking action to gain from a cryptocurrency bubble. Otherwise, they should also know how to manage the risk in every process.