While there are many different strategies to use in position trading, below you’ll find the four most popular strategies position traders use.
Support and resistance
Support and resistance zones are generally implemented when the price is range-bound and has no significant trend. These support and resistance zones also fall into the category of trading indicators as they are used to identify points of interest.
Support zones are areas where the price retests previous lows and fails to break past those lows. This is because when the price reaches this level, buyers will generally come in and open buy positions, expecting the price to reverse to the upside. Traders could then choose to close their positions once the price reaches the resistance zone.
On the other hand, resistance zones are just the opposite, where the price retests previous highs and fails to break above those highs. This is due to sellers coming in at those zones expecting the price to reverse to the downside. Once the price reaches the support zone, traders could choose to close their positions.
There are, however, certain aspects traders might need to take into consideration when trying to identify possible support and resistance zones.
The first aspect in identifying possible support and resistance zones is looking at historical price levels where the price retested a particular area multiple times, failing to break above or below those areas as a possible indication of future price movements.
Secondly, there are various technical indicators, such as the Fibonacci retracement indicator, to identify possible support and resistance zones.
![Support and resistance example chart](https://images.prismic.io/tnfev2/60f9e029-256e-41fb-815e-bc88984a2f61_img2+Position+Trading+Bodyimg+1500x1000+Article.png?auto=compress%2Cformat&fit=max&w=3840)
Breakout
A breakout is another strategy involving identifying support and resistance zones where the price, with enough momentum, breaks out of one of these zones in either an upward or a downward direction.
The way it works is that the price will move to one of these two zones, and instead of reversing, it will break out, which could indicate that the price will likely continue the trend.
If the price breaks out at resistance, it becomes a future support zone; if the price breaks out of support, it becomes a future resistance zone.
Position traders could keep an eye on price movements, and when the price breaks out, they could open a buy or sell order depending on the direction of the breakout.
Position traders could use this strategy by incorporating other indicators, such as the Fibonacci retracement.
![Breakout example chart](https://images.prismic.io/tnfev2/1e54c598-0e92-4d2e-b741-846986d9f3a1_img3+Position+Trading+Bodyimg+1500x1000+Article.png?auto=compress%2Cformat&fit=max&w=3840)
Pullback and retracement
A pullback happens when there is a short-term dip in price before continuing in the current trend. This short-term dip (also known as a retracement) could be seen as a period of rest.
Traders could capitalise on these pullbacks as soon as the price starts to continue back in the current trend, where the aim is to open a potential buy or sell order when the pullback has ceased, depending on the direction of the prevailing trend.
It might be best not to confuse pullbacks with reversals, as reversals are a permanent change in the trends direction.
![Pullback and retracement example chart](https://images.prismic.io/tnfev2/621b48b8-9d05-4a4d-8796-21b128de4d27_img4+Position+Trading+Bodyimg+1500x1000+Article.png?auto=compress%2Cformat&fit=max&w=3840)
Trend trading
As previously mentioned, position traders tend to capitalise on positions with a strong trend, believing that once a trend is formed, it will continue until the market sentiment starts to change.
With the trend trading strategy, it might be best to capture the trend as early as possible and exit when a certain amount of profit has been reached or the trend reverses.
With all of these strategies, position traders could implement various technical indicators, and in the next section, we’ll look at some of these indicators that could be incorporated.
![Trending trading example chart](https://images.prismic.io/tnfev2/76388787-754c-4735-8c6c-cceb59b205a7_img5+Position+Trading+Bodyimg+1500x1000+Article.png?auto=compress%2Cformat&fit=max&w=3840)