First-time investors are often confused by the technical terms and jargon of the stock market and use terms like ‘holdings’ and ‘positions’ interchangeably. However, this is incorrect. While holdings and positions may seem like synonyms, they have distinct meanings in the context of the stock market.
The main difference between holdings and positions is that holdings refer to all the financial securities (stocks, bonds, and ETFs) you own in your Demat account. In contrast, positions allude to open positions taken in the derivatives segment or intraday trading. To explain the two concepts, we discuss the differences between holdings and positions in the following sections.
Also Read: What is share market
Holding in a share market
To understand the differences between holdings and positions, it is important to know what each of these terms means. Holdings in stock market terminology signify the securities or investments you currently own in your portfolio.
In other words, holdings are the collection of assets you currently hold in your investment portfolio. As such, holdings can include different types of securities, including stocks, bonds, mutual funds, ETFs, and other financial instruments.
Also Read: What is holding period
What is a position in the stock market
In the context of stock market investment, position refers to ownership of a particular security, like a stock or derivative, at a given time. Positions denote your market exposure to a particular financial asset. Any trader takes a position by purchasing with a buy order. Positions can also be made if the trader sells short securities. Opening a position is followed by exiting or closing at some point in the future.
Positions can be either long or short. A long position is when you buy shares of a company and hold them, anticipating an increase in the stock’s price. A short position, on the other hand, refers to short selling, where you sell the borrowed stock to buy it back for a lower price due to a short-term price fall.
Also Read: Bull market
Holdings vs. position
The primary difference between holdings and positions is that the former implies securities you currently hold in your investment portfolio. On the other hand, the latter is used to denote the trades you have made with particular assets. Positions indicate your current ownership or exposure to those assets. While this remains the main bone of contention, there are several other key differentiators in the holdings vs. positions debate:
| Parameter | Holdings | Positions |
| Meaning | Holdings mean a tally of all the securities you currently own in your investment portfolio. | Positions mean tallying the investor’s stake in a particular asset or financial security. |
| Relationship to ownership | Showcases your ownership of different assets. | Showcases your exposure to assets. |
| Nature | A holdings tally is ongoing since it includes all assets you currently own. | A positions tally is temporary since it indicates only active trades which will close once you sell. |
| Information | Holdings relay a comprehensive list of all the assets you own in your portfolio. | Positions relay the status and details of each specific trade. |
| Duration | Holdings can be short-term or long-term. | Positions are generally short-term. |
| Goals | To ensure long-term wealth building and portfolio diversification. | To capitalise on market movements. |
Difference between holdings and positions – Quick summary
If you still require some clarity on the differences between holdings and positions, here’s a detailed summary you can review:
- Holdings include the different assets you own in your Demat account. These may be stocks, bonds, ETFs, etc. Conversely, positions represent your active trades that are currently open and yet to be settled. This may include intraday or derivative transactions.
- The securities that currently reside in your portfolio are holdings.
- Positions are the specific investment or trade in a particular security like stocks or options. It represents your exposure to that asset at a given moment in time.
- Holdings can be subdivided into different types. Equity, debt, and alternative holdings are common types of holdings.
- Positions can be classified into long and short categories. Long positions happen when you buy a stock and hold it in hopes of price appreciation in the future. In a short position, you anticipate a price decline and sell a borrowed security (short it), planning to buy it back at a lower price.
- Positions remain open until you sell the asset or close your short position by covering the investment.
Also Read: Share holding pattern
Conclusion
When it comes to managing investments, having the right knowledge is essential. From the above holdings vs. positions debate, it is clear that each term has a specific meaning in the world of investment. If you are a beginner, it is essential to understand the differences between holdings and positions to curate an effective portfolio and trade.
