What Is a Position?

A position represents your current holdings in a specific asset within a trading portfolio. In the context of algorithmic trading and trading bots, a position tracks all the details about an asset you own—including the quantity held, its current value, cost basis, and performance since acquisition.

Understanding Positions

When a trading bot executes a buy order, it creates or adds to a position in that asset. The position remains open as long as you hold any quantity of that asset. When all holdings are sold, the position is closed.

Position Anatomy

┌─────────────────────────────────────────────────────────────────┐
│                        POSITION                                  │
├─────────────────────────────────────────────────────────────────┤
│                                                                  │
│   ASSET DETAILS              HOLDINGS                            │
│   ─────────────              ────────                            │
│   • Symbol (BTC, AAPL)       • Quantity owned                   │
│   • Asset type               • Average entry price              │
│   • Exchange/Market          • Total cost basis                 │
│                                                                  │
│   CURRENT VALUE              PERFORMANCE                         │
│   ─────────────              ───────────                         │
│   • Market price             • Unrealized P&L                   │
│   • Total value              • Return percentage                │
│   • Portfolio weight         • Gain/Loss since entry            │
│                                                                  │
└─────────────────────────────────────────────────────────────────┘

Position Lifecycle

1. Opening a Position

A position is opened when the algorithm first buys an asset:

• A buy order is executed for an asset not currently held
• The position records the entry price and quantity
• Cost basis is established (price × quantity + fees)

2. Building a Position

The position can grow through additional purchases:

• Additional buy orders increase the quantity
• Average entry price is recalculated
• Cost basis accumulates with each purchase

3. Reducing a Position

Partial sales reduce the position size:

• Sell orders decrease the quantity held
• Realized profit/loss is calculated for sold portion
• Remaining position continues to be tracked

4. Closing a Position

A position closes when all holdings are sold:

• Final sell order brings quantity to zero
• Total realized profit/loss is calculated
• Position history is recorded for performance analysis

Position vs. Trade

Understanding the distinction is important:

Key Differences

• A position shows what you currently own
• A trade shows a completed investment cycle
• One position can result from multiple trades
• Closing a position creates one or more trades

Example

Day 1: Buy 10 BTC @ $40,000  → Position: 10 BTC
Day 2: Buy 5 BTC @ $42,000   → Position: 15 BTC
Day 3: Sell 8 BTC @ $45,000  → Position: 7 BTC (Trade #1 completed)
Day 4: Sell 7 BTC @ $44,000  → Position: 0 BTC (Trade #2 completed)

Position Metrics

Value Metrics

Performance Metrics

Order Metrics

Position Sizing

In algorithmic trading, position sizing is crucial for risk management:

Fixed Position Sizing

Each position = Fixed dollar amount
Example: Always invest $1,000 per position

Percentage-Based Sizing

Each position = Percentage of portfolio
Example: Maximum 5% of portfolio per position

Risk-Based Sizing

Position size based on acceptable loss
Example: Risk 1% of portfolio per trade
Position Size = (Portfolio × Risk%) / Stop-Loss Distance

Position Management Strategies

Scaling In

Gradually building a position over time:

• Reduces timing risk
• Averages entry price
• Common in volatile markets

Scaling Out

Gradually reducing a position:

• Locks in partial profits
• Reduces exposure to reversals
• Balances profit-taking with upside potential

Rebalancing

Adjusting position sizes to maintain target allocations:

• Maintains portfolio balance
• Systematic buying low, selling high
• Common in long-term strategies

Positions on Finterion

On Finterion, you can view all positions held by a trading algorithm:

• Current Positions: Active holdings with real-time values
• Position Performance: Unrealized gains/losses per asset
• Portfolio Composition: How positions contribute to total portfolio
• Position History: Past positions and their outcomes

Understanding positions helps you evaluate:

1. Diversification: How spread out is the portfolio?
2. Concentration Risk: Are any positions too large?
3. Unrealized Performance: How are current holdings performing?
4. Trading Activity: Is the algorithm actively managing positions?

Related Concepts

• Trades - Complete buy-sell cycles
• Profit - Realized earnings from closed positions
• Drawdown - Maximum decline in portfolio value
• What Is a Trading Bot? - How bots manage positions automatically