Differences between position and signal trading

[Brian Connor]

Hi, I would like to know the differences between position and signal trading.

[Rishabh Tyagi]

Position trading

- It is holding the trade for long-term. Like investing in value stocks.

- Position traders base their decisions on fundamental analysis and macroeconomic factors. They analyze the overall market conditions, economic indicators, company financials, and other factors that impact the long-term prospects of an asset.

Signal trading

- It is complete the cycle or buy & sell or sell first & then buy in short period of time. Like day or swing trading.  

- Traders rely on technical analysis and use various indicators, patterns, or algorithms to generate trading signals. They focus on price charts, trends, support and resistance levels, moving averages, and other technical tools to identify short-term trading opportunities.

[Adam Morrison]

Hello, thanks for asking! 

Position trading is characterized by a long period of staying in the market. Position traders hope that their asset will appreciate in value, hence this period usually lasts from weeks to months. These traders don’t react to the short term fluctuations in the value but care more about the long term value. Position traders usually don’t trade so often, placing on average around 10 trades a year.

On the other side, signal traders react to signals which are gathered by analysis or signal providers. These signals can be manual (generated by humans), or automatic (generated by computers). Their positions don’t last long, as they place trades more frequently than position traders.