Italic letters tend to slow reading. Sometimes this presents an advantage. Use all caps for only very short headings. Although less often used in headings, small caps offer an option that consumes less space than all caps do. In addition to or in place of these formats, you can also vary type size, font, and color to make headings stand out.
Position is based on aesthetics and influenced by the balance of text on a page.
What matters most is that each level be consistent. I assume you're producing your own camera-ready master. If, however, you're submitting a manuscript for publication, forgo the formatting altogether, except for underlining words that must be italicized.