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What is a long and short position in trading?


Lisa O'Neill

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Hello, thank you for your question! 

Traders tend to act according to the market’s sentiment and according to their expectations. Therefore, they may “go long” or “go short” with their positions. 

 

A long position means that the trader expects that an underlying value of the asset will gain. For example, he buys the USD/JPY currency pair, therefore he expects the US Dollar to appreciate against the Japanese Yen.

 

A short position means quite contrary to the long position, in this case, traders expect from an asset to lose in value, therefore they sell it. Using the same example, USD/JPY traders sell the greenback in order to buy the Yen.

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Going long is to buy first & then sell, and going short is to sell first & then buy. 

There are multiple names used to describe the momentum. 

Long Position: The bet is on the price increasing from your bought level.

Short Position: Here, the bet bet is on the price declining from the current level. So, you sell first, and then buy. 

If you getting confused over selling first and buying later just remember, for a profitable trade the buying price should always be less than the selling price.  

To learn more on short selling, you can check out this short guide by Stevehttps://www.asktraders.com/learn-to-trade/stock-trading/shorting-stocks/ 

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