Is Positional Trading Profitable? Complete Guide with Rules and Examples
Trading is one of the most popular ways to make money from the stock market. But not every trader wants to sit in front of the screen all day. Some prefer to hold their trades for days, weeks, or even months. This type of trading is called Positional Trading.
1. What is Positional Trading?
Positional trading is a trading style where a trader holds a stock, commodity, or currency for a long duration — usually from a few weeks to several months. The main idea is to capture big market moves rather than small daily fluctuations.
Unlike intraday or swing trading, positional trading requires more patience. Traders focus on fundamental analysis, technical analysis, and market trends before entering a position.
👉 Example:
Suppose you believe that a company like Reliance or TCS will grow in the next 3 months. You buy its stock today and hold it for 3–4 months. Even if there are small ups and downs daily, you don’t sell it. You wait for the bigger upward move. This is called positional trading.
2. Is Positional Trading Profitable?
Yes, positional trading can be profitable if done with the right strategy. Since traders hold positions for weeks or months, they can take advantage of major price trends.
However, profits depend on:
Right stock selection
Strong analysis (technical + fundamental)
Patience to hold the stock
Proper stop-loss and risk management
👉 Example:
Imagine you bought Infosys shares at ₹1,400 and held them for 3 months. After 3 months, the price goes to ₹1,800. You earn ₹400 per share without worrying about daily market volatility.
This shows that positional trading is profitable, but only for those who do proper research and manage risks.
3. What is the 3-5-7 Rule in Trading?
The 3-5-7 rule in trading is a risk management rule. It helps traders decide how much capital they should risk in different market situations.
3% Rule → Never risk more than 3% of your total capital in a single trade.
5% Rule → Total risk from multiple trades at one time should not exceed 5%.
7% Rule → If your losses reach 7% of your portfolio in a month, stop trading and re-analyze your strategy.
👉 Example:
If you have ₹1,00,000 capital:
Maximum loss per trade = ₹3,000 (3%)
Maximum loss from all trades together = ₹5,000 (5%)
If monthly loss = ₹7,000 (7%), stop trading and review.
This rule protects traders from heavy losses.
4. What is Positioning in Trading?
In trading, positioning simply means how you place your trades — whether you are buying (long position) or selling (short position).
Long Position (Buy) → You expect the price to go up. Example: Buying Reliance at ₹2,500 expecting it will rise to ₹2,800.
Short Position (Sell) → You expect the price to fall. Example: Selling Infosys at ₹1,600 expecting it will drop to ₹1,400.
Your positioning depends on your market outlook, trend analysis, and risk capacity.
5. Positional Trading with Examples
Let’s look at some simple examples of positional trading:
1. Stock Example
Buy Tata Motors at ₹600
Hold for 2 months
Sell at ₹750 → Profit = ₹150 per share
2. Commodity Example
Buy Gold at ₹55,000 per 10 grams
Hold for 3 months
Sell at ₹60,000 → Profit = ₹5,000
3. Currency Example
Buy USD/INR at 82.00
Hold for 1 month
Sell at 84.00 → Profit of 2 points per dollar
These examples show how positional traders earn from long-term market movements.
6. Is Positional Trading Beneficial?
Yes, positional trading has many benefits, especially for people who cannot watch the market all day.
Advantages:
Less stressful compared to intraday trading
Potential to earn higher profits from big market trends
Less brokerage and transaction costs
Suitable for working professionals and students
Disadvantages:
Requires patience (profits may take weeks or months)
Risk of overnight news or market crashes
Capital may get stuck for long durations
👉 Overall, positional trading is beneficial for patient traders who focus on quality analysis and risk management.
Additional Important Questions about Positional Trading
1. How much capital is required for positional trading?
There is no fixed rule, but generally, you should start with at least ₹10,000 to ₹50,000. More capital means better flexibility, but never invest all your savings. Always keep some money for emergencies.
2. What is the difference between positional trading and swing trading?
Swing Trading → Holding period is short (a few days to 2 weeks).
Positional Trading → Holding period is long (weeks to months).
👉 Example: Swing trader may hold Infosys for 5 days, while positional trader may hold it for 3 months.
3. Can beginners do positional trading?
Yes, beginners can start with positional trading because it does not require constant screen time like intraday trading. But they must learn:
Basic stock market knowledge
Chart reading (technical analysis)
Risk management (stop-loss and position sizing)
4. What is the risk in positional trading?
The main risks are:
Market crashes due to global or political events
Overnight news affecting stock prices
Wrong analysis leading to losses
That’s why using stop-loss and investing only what you can afford to lose is very important.
5. How to select stocks for positional trading?
Some tips for stock selection:
Look for companies with strong fundamentals (good profits, growth potential)
Use technical indicators (Moving Averages, RSI, MACD)
Check industry trends (like IT, pharma, banking)
Avoid penny stocks (very cheap stocks with high risk)
6. Which is better: Intraday or Positional Trading?
It depends on your style:
Intraday Trading → High risk, fast returns, needs full-day focus.
Positional Trading → Safer, long-term profits, less stress.
👉 For beginners or working people, positional trading is better.
7. How long should I hold a stock in positional trading?
It depends on the market trend. Usually, traders hold for 2 weeks to 6 months. You should exit when:
Your target profit is achieved
Stock breaks below stop-loss level
Market trend changes
8. Can I do positional trading with options and futures?
Yes, positional trading can also be done in derivatives (F&O). But it is riskier than stock trading because of leverage. Beginners should first learn stock positional trading before trying options or futures.
9. Do I need a Demat account for positional trading?
Yes ,you must have a Demat and trading account with a broker (like Upstox, Zerodha, Angel One, etc.) to buy and hold stocks for weeks or months.
10. Is positional trading good for students or job holders?
Yes, positional trading is perfect for students and job holders because it does not require monitoring the market all the time. You just need:
30 minutes to 1 hour daily for analysis
Patience to hold stocks
A disciplined trading plan
Conclusion
Positional trading is one of the best trading styles for people who want to earn profits without daily stress. By understanding the 3-5-7 rule, proper positioning, and long-term examples, traders can reduce risks and maximize profits.
It is not about quick money — it is about slow and steady growth. If you learn how to select the right stocks and follow risk management, positional trading can be very rewarding.
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