As the name implies, reversal trading is when traders seek to anticipate a reversal in a price trend with the aim to guarantee entrance into a trade ahead of the market.
This strategy is considered more difficult and risky. True reversals can be difficult to spot, but they’re also more rewarding if they are correctly predicted.
Traders use a variety of tools to spot reversals, such as momentum and volume indicators or visual cues on charts such as triple tops and bottoms, and head-and-shoulders patterns.
Position trading is a long-term strategy that may play out over periods of weeks, months or even years. Position traders often base their strategies on long-term macroeconomic trends of different economies. They also typically operate with low levels of leverage and smaller trade sizes with the expectation of possibly profiting on large price movements over a long period of time.
These traders are more likely to rely on fundamental analysis together with technical indicators to choose their entry and exit levels. This type of trading may require greater levels of patience and stamina from traders, and may not be desirable for those seeking to turn a fast profit in a day-trading situation.