In forex trading, opening a position is just the beginning. For traders following a position trading strategy, learning when and how to add positions is key to maximizing opportunities. Besides simply setting a position, a seasoned position trader manages trades dynamically, building into trends or adjusting entries as market conditions evolve.
At ATFX, we believe that understanding positional trading techniques and applying them wisely within a solid risk management plan, is essential to trading successfully.
1. What Is Position Trading?
Position trading is a long-term approach where traders hold positions for extended periods, typically ranging from days to weeks or even months. The goal is to capture major price movements by aligning trades with broader economic or fundamental trends.
When asking “what is positional trading,” think of it as the opposite of scalping or day trading. Instead of reacting to short-term volatility, a position trader takes fewer, more deliberate trades based on a macro view of the market. This approach often relies on fundamental analysis, supported by technical confirmation.
2. Pros and Cons of Position Trading
Before applying any position trading strategy, it’s essential to weigh the benefits and trade-offs. Long-term trading can offer stability, but it’s not without challenges.
Pros
- Lower trade frequency: Fewer trades mean lower transaction costs and less emotional pressure.
- Alignment with macro trends: A position trader typically rides broader trends backed by strong economic narratives.
- Less screen time: Positional trading does not demand constant monitoring, offering more flexibility.
Cons
- Requires patience and discipline: Trades may take days or weeks to develop.
- Exposure to macro events: Holding through weekends or data releases increases risk.
- Prolonged drawdowns: Market reversals or consolidations can test a trader’s conviction and capital.
Understanding these trade-offs helps traders assess if position trading suits their personality, strategy, and risk appetite.
3. Why Add Positions?
In many positional trading techniques, adding positions is a tactical way to manage capital, improve average entry price, or build into momentum.
Benefits of Adding Positions:
- Maximize profits: Leverage a winning trend by adding positions to amplify returns.
- Capitalise on favourable price action: Adding to a position when market signals confirm a good opportunity
- Efficient capital deployment: Gradually scaling in reduces initial risk while maintaining flexibility.
However, without solid risk management, adding can lead to overexposure, particularly if the market turns suddenly.
Before placing a trade, use a position size calculator to determine how many units to buy or sell based on your account size, risk tolerance, and stop-loss level.
4. Pyramiding – Adding to Winning Trades for Position Trading Strategy & Technique
Pyramiding is a smart way for a position trader to build on strength. This technique involves adding to a position only when it becomes profitable, often after a pullback or breakout confirmation.
How It Works:
- Open an initial position with modest size.
- As the price moves in your favour, add smaller positions at key intervals.
- Use trailing stops or layered risk to protect profits.
Why It Works in Position Trading:
It uses unrealized gains to increase exposure without increasing initial risk, making it one of the most effective positional trading techniques for trending markets.
Best used in: Strong, directional markets where momentum is clear and sustained.
5. Averaging Down – Adding to Losing Trades
A more controversial position trading strategy is averaging down, where a trader adds to a losing position as the market moves against them, aiming to lower the average entry price.
Example: You buy GBP/USD at 1.2500. Price drops to 1.2450, so you buy again. While each CFD trade is separate, most platforms display a combined average entry price, making recovery easier if the market rebounds.
Risk: If the trend continues against you, losses snowball. This technique requires strict risk control and should only be used in ranging markets or during temporary corrections within broader trends.
Best used by: Experienced traders with high conviction and defined risk limits.
6. Martingale Strategy – Doubling Down Aggressively
The Martingale system takes averaging down to the extreme, by doubling the position size after each losing trade, aiming to recover with a single win.
Why It’s Risky:
It assumes the market will eventually reverse. But prolonged losing streaks can wipe out an account. While it may appeal to high-risk traders, it’s generally not suitable for most position traders.
Best used by: Advanced traders maintaining a high margin level and strong risk management, and even then, cautiously.
7. Grid Trading – Adding Positions at Regular Intervals
Grid trading places buy and sell orders at fixed price intervals above and below the market, regardless of trend direction.
How It Works:
- Create a “grid” of pending orders.
- As price fluctuates, positions are triggered and closed based on movement.
- Profits are harvested in increments.
Best for Position Traders?
Yes, in sideways markets. However, in trending markets, grids can lead to large drawdowns if trades are not managed or hedged.
Best used in: Range-bound or consolidating markets, often with Electronic Advisor (EA) support.
8. Scaling In Before Confirmation – Aggressive Entry Strategy
Some advanced traders choose to scale in before confirmation, entering with a small position based on early price action signals.
Why Use It: You gain early exposure and can capitalise if the trend unfolds. If you’re wrong, the loss is small due to low initial size.
Risks: Higher chance of being stopped out in whipsaws or false breakouts.
Best used by: Skilled traders who are confident reading market structure and know when to exit fast.
Final Thoughts from ATFX for Position Trading
Adding positions can strengthen a position trading strategy too close together when guided by clarity, discipline, and market awareness. Whether you’re building into trends with pyramiding or managing ranges with grid setups, success depends on choosing the right technique and managing risk effectively.
ATFX equip position traders with powerful tools, expert insights, and advanced platform features to help you trade smarter.
Trade with precision. Stay in control. And in position trading, one good entry can be the start of something big.
