A long position means buying a product because you expect the price to rise. A short position means selling a product because you expect the price to fall.
Long vs short position
| Position type | Also known as | Opened at | Closed at | When it may profit |
|---|---|---|---|---|
| Long position | Buy order | Ask price | Bid price | When the bid price is higher than the opening price. |
| Short position | Sell order | Bid price | Ask price | When the ask price is lower than the opening price. |
Example
| Scenario | Explanation |
|---|---|
| Long / buy position | You buy a product expecting the price to rise. If the market price rises and the position is closed at a higher bid price, the trade may generate profit. |
| Short / sell position | You sell a product expecting the price to fall. If the market price falls and the position is closed at a lower ask price, the trade may generate profit. |
Important notes
- Long and short positions both involve trading risk.
- Market movement may result in profit or loss.
- The bid and ask price difference may affect the opening and closing price of a trade.
- Using leverage may increase both potential profits and potential losses.