Position Trader

Well… in the Kama Sutra, there lives a kind of give and take as the, uh...Oh wait. Different position trading.

This one, the way more boring one, refers more or less to the duration in which an investor takes a position in a given security. Yeah. Not nearly as fun. So…duration:

A megatrend is a long term trend that is big and fat and wide and can last decades. Like the advent of the internet. A given market, like a bear or bull, lasts, eih, a few years and change. And things that are intermediate term, like a few months to maybe a year, are where position trading comes in.

Like…a prognosticator might give convincing data to a hedge fund that this winter will be much colder in high population areas than was previously predicted so he wants to short gas futures for the next 6 months.

That would be a position trade, short gas. Kind of like Gas-X. Only...different. Ahem. So that’s position trading, where you’re thinking about a couple quarters in the future for a given investment. And if you think about the original position we proffered, if the players involved are good, it can last for an hour, maybe more.

Now put yourself on a swing set. Well, one swing from peak to trough lasts only seconds. But that’s swing trading. Position trading lasts months, whereas swing trading lasts days.

There’s a shock from a bomb having gone off in the Middle East, and for three days oil prices spike, with the world holding its breath, thinking this is the beginning of the end, and that more bombs will come in other areas. But then the swing trader might make a bet that this bomb was an isolated incident...a one-off or that, in fact, the headline was misspelled, courtesy of the poorly schooled journalist who wrote it, and instead, it was supposed to be THIS headline:

So, in those three days, oil prices fall, and the swing cycle is complete. In our next video opus on the topic, maybe we’ll get into a different kind of swing...