How it works
The position trader builds a thesis on a slow-moving driver: interest rate cycle, commodity supercycle, currency mispricing, earnings re-rating. Entry is sized to a wide stop based on weekly or monthly chart structure. Exits come from thesis invalidation, not chart tactics. One trade can be the year’s PnL.
Example
You believe the Fed will pivot to easing within 12 months while the BoJ stays put. You short USD/JPY at 155.00 in three tranches of one mini lot each as the pair extends. Stop on the full position at 162.00 (700 pips). Target 138.00 (1,700 pips). The trade unfolds over 9 months with two 400-pip drawdowns along the way. You hold both. Final exit at 140.20, capturing about 1,480 pips.
What it needs
- Macro thesis solid enough to survive months of counter-evidence
- Capital sized so a 5 to 8 percent paper drawdown is bearable
- Swap math: a year of swap can be larger than the price move
- Discipline to not micro-manage on news that does not change the thesis
Why it matters
Position trading is closest to investing. Costs per unit of expected return are the lowest of any active style because turnover is low. The trade-off is psychological: sitting through 400-pip drawdowns on a thesis takes a level of conviction that no amount of backtesting builds. Mismatched temperament is the silent killer here.
