Thousands of individuals trade and invest in stocks every day on many of the popular trading platforms. They either engage in day trading or invest in certain stocks for long-term gains. Those who believe in value investing are patient and wait for returns in the long run. Every trader can select his preferred trading style from the two primary alternatives, intraday and positional trading. A person may use both with a single demat account for trading. So, there is no need to choose just one among them. However, the trader must select the method of exchange that would increase his wealth in the market based on his investment.
Let's examine in depth the difference between intraday and positional trading i, evaluate them, and assist you in selecting the best trading method for your needs.
Table of Content
What Is Intraday Trading?
Intraday trading involves buying and selling securities on the same day. If a trader wants to invest in stocks, they can make decisions by monitoring the stocks on a trading platform. Many stocks can be purchased and sold on that particular day before the day closes. If you invest your money wisely in this way, you can make a lot of profits over a long period of time . In the short term, intraday trading may also help you get good returns on investments. For instance, if you invest Rs.200, you can earn Rs.250 or 300 in one day. One can invest in more than one stock to earn more. Suppose a stock’s price is 300, and you buy 100 shares. This means buying shares for Rs.30000 can become 45000 at the end of the closing day.As a result, you receive 10-20% of the profit on your investment.
What Is Positional Trading?
Stock trading is a way of making money. It allows you to trade in a variety of markets. Every day, many new and old investors check the stock market and invest using their experiences. Long-term and short-term investing are the processes by which an investor can buy and sell shares. In positional trading, a trader buys a stock of a company, and decides to sell it after many days, months or even years to get a higher profit on the money he invested . Such a trader is less concerned by short-term price fluctuations and the day's news. They don't get disturbed by daily reports until they alter their long-term approach to that position.
The price of most assets moves in response to a shift in the underlying fundamentals. On the other hand, some assets lag behind for a while before changing their pattern. This occurs due to significant modifications within the company or the industry's fundamentals. The asset price will fluctuate for a while before stabilizing . Positional trading aims to capitalize on this very fact. Before choosing between intraday and positional trading, it's crucial to also weigh the advantages and disadvantages of intraday trading. Use our financial calculator to help you make informed financial decisions
Intraday vs Positional trading
| Intraday Trading | Positional Trading |
|---|---|
| Benefits | |
| Traders may make significant gains by focusing on a small objective for a little time. | It is less risky than day trading. |
| Since the trader's frequency is substantial and enables the trader to place a trade, intraday regularly easily uses this form of transaction. | They can produce greater returns. |
| They have the capacity to produce greater return percentages. | They provide a range of tactical choices. |
| Risks | |
| Before engaging in intraday trading, a trader needs the appropriate knowledge and skills. | Because they plan to hold their investments for a long period, traders must do considerable research before making any investments. |
| Due to the briefness of the day, intraday trading is time-consuming. If you work full-time, it is quite challenging to manage. | It takes a while for traders to get a return on their investments. |
| Intraday trading is extremely risky; even a minor error can result in a significant loss. | It carries no risk. |
| Time-Frame | |
| To track changes as soon as they occur, traders must constantly watch and have keen eyes. It is obvious that every investor must balance their position on the day they purchase and sell shares. | The ideal time period for positional trading is during an intense positive trend. When the trends appear to be moving upward, you might place the order. You might place orders both before and after market hours. |
| The operating hours of BSE and NSE are 9:15 am – 3:30 pm. This implies that you should start trading as soon as the market opens. | For any type of trading, the best hours to trade on the Indian stock market are from 9:15 am to 3:30 pm. |
Difference Between Intraday and Positional Trading
Trade tactics are often used in the market, with intraday trading being the most popular. You should consider intraday trading if you're searching for quick gains. Shares and other financial products are bought and sold intraday within one trading session. It seeks to capitalize on minute market movements.Positional trading is different. It involves holding overnight positions depending on the trading strategy, risk management, and time frame. To book gains, positional trades require holding positions for a period ranging from a few days to months or even years. When you decide to leave, your position depends on you. Several traders select positional trading because it offers a longer time frame. Intraday trading may seem a little scary, given how unpredictable the markets are.
Positional Trading vs Intraday Trading - What to Choose?
The most crucial question is, which is best for you intraday or positional trading? Capital is the primary factor that determines the answer, among others. Positional trading involves greater capital affordability. Therefore, if you have limited resources, you should choose intraday trading. The ability to accept danger is the second factor. Intraday trading involves substantial risk, as was already mentioned. If you are willing to take on a significant level of risk, intraday trading is the best option. If not, positional trading is available to you with somewhat reduced risks. Time is the third and last factor. Intraday is the way to go if you are a trader who spends the entire day fixed to the screen.
Conclusion
The difference between intraday v/s positional trading ultimately depends on the risk, time commitment, and investment objectives. The potential for quick returns exists in intraday trading, which is identified by short-term, high-frequency transactions, but it also requires continual attention and carries more dangers. Positional trading, on the other hand, can appeal to people who take a more patient approach to the markets due to its longer investment horizon. Regardless of the path one takes, it is critical to follow a well-researched plan, adopt appropriate risk management, and maintain adaptability to deal with the financial markets' ever-evolving dynamics.
