Going long and going short

Every trade points in one of two directions. Going long means you buy, expecting the price to rise; going short means you sell, expecting it to fall. Knowing which direction a position takes, and how profit and loss follow from it, is one of the first things worth getting clear.

Going long: buying to profit from a rise

When you go long, you buy an instrument because you expect its price to increase. If the price later rises above what you paid, the position shows a profit; if it falls below, it shows a loss. Going long is the direction most people picture when they first think about buying and selling.

Going short: selling to profit from a fall

Going short is the mirror image. You sell first, expecting the price to decline, with the aim of buying back later at a lower level. If the price falls, the position gains; if it rises instead, it loses. Shorting means a downward move is something a trader can respond to, not just an upward one.

Profit and loss in each direction

Suppose, as an illustration, EUR/USD is quoted at 1.1000. A long position profits if the price moves up toward 1.1050 and loses if it drifts down to 1.0950. A short position opened at the same level does the opposite: it profits near 1.0950 and loses near 1.1050. The size of the move, not the direction you chose, sets how large the result is.