What does Long & Short mean?
While there are a lot of experienced traders on Trading view, yesterday I realised that there are still very new traders. A Tradingview user contacted me to ask such a simple question that took him a week to find the answer to......
What does long and short mean?
The Basics
Long Position
Holding a long position means you are buying the instrument (stock, currency, bitcoin etc). In simple language it is also the market going up.
Short Position
Holding a short position means you are selling the instrument (stock, currency, bitcoin etc). In simple language it is also the market going down.
This basic language is used for CFDs, forex, crypto and most retail trading. Buying or selling no matter what the size is also referred to as "Holding a position". If you sold 10 lots of BTCUSD, you would be holding a short position. For options trading it is a little bit different.
Bullish vs Bearish
Traders who have an expectation that the market will go up will hold a Long Position and are called "Bullish". The opposite of this is a trader who beleives the market will go down. A bearish trader will hold a Short Position with an expectation of price falling.
Difference in Options Positions.
Options Long Position
When a trader uses options contracts, long and short positions have slightly different meanings. Buying or holding a call or put option is a long position because the investor owns the right to buy or sell the security at a specified price.
Options Short Position
Selling or writing a call or put option is just the opposite and is a short position because the writer is obligated to sell the contracts to or buy the contracts from the long position holder, or buyer of the option.
What does long and short mean?
The Basics
Long Position
Holding a long position means you are buying the instrument (stock, currency, bitcoin etc). In simple language it is also the market going up.
Short Position
Holding a short position means you are selling the instrument (stock, currency, bitcoin etc). In simple language it is also the market going down.
This basic language is used for CFDs, forex, crypto and most retail trading. Buying or selling no matter what the size is also referred to as "Holding a position". If you sold 10 lots of BTCUSD, you would be holding a short position. For options trading it is a little bit different.
Bullish vs Bearish
Traders who have an expectation that the market will go up will hold a Long Position and are called "Bullish". The opposite of this is a trader who beleives the market will go down. A bearish trader will hold a Short Position with an expectation of price falling.
Difference in Options Positions.
Options Long Position
When a trader uses options contracts, long and short positions have slightly different meanings. Buying or holding a call or put option is a long position because the investor owns the right to buy or sell the security at a specified price.
Options Short Position
Selling or writing a call or put option is just the opposite and is a short position because the writer is obligated to sell the contracts to or buy the contracts from the long position holder, or buyer of the option.
Disclaimer
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