What brokers call a short and long position

The essence of trading in financial markets is to make a profit on the difference between the purchase price and the sale price. At the same time, you can play to increase stocks or currencies, opening a long position (long), and to decrease, opening a short position (short).

What is a long position

The principle of opening long positions ("long position" or simply "long") by the trader is as follows: "Buy cheaper, sell more expensive." In this case, the trader earns on the difference (margin) between the purchase and sale price, i.e. he buys currency or shares cheaply, and sells at a higher price.

An example of a long position: you buy shares at the beginning of the month at 100 r. (open a position), and at the end you sell for 120 r. (close the position). Thus, the profit was 20 p. from one share.

The meaning of this investment strategy is expressed as buy and hold. Such positions are opened with predicted market growth in the future and investor confidence in the growth of the value of the security. If the trader’s forecasts do not materialize, he receives a loss.

To open a long position, the broker is given a "buy" order, and to close - a "sell" order. Holders of long positions are called "bulls."

Long positions are used in the financial market much more often than short ones.