What are long and short positions

Long positions bet on asset prices rising, by buying and expecting prices to rise to make a profit; short positions betting on asset prices falling, by borrowing and selling assets, expecting prices to fall and repurchasing profits.

Long and Short Positions

Long Position

• Meaning: A bet that the price of an asset will rise.
• How to do it: Buy an asset and expect its price to rise to make a profit.
• Profit: If the asset price increases, long investors will profit.
• Risk: If the asset price falls, long investors will lose money.

Short Position

• Meaning: A bet that the price of an asset will fall.
• How to do it: Borrow an asset and sell it, anticipating its price to fall and repurchase it at a profit.
• Profit: If the asset price falls, short investors will profit.
• Risk: If the asset price increases, short investors will lose money.

Key Differences

The main difference between a long position and a short position is the direction of the bet:

• Long: Bet that the price of an asset will increase.
• Short: Betting that the price of an asset will fall.

Other Key Points

• Leverage: Leverage can be used on both long and short positions, magnifying potential gains and losses.
• Futures Contracts: Long and short positions are typically traded using futures contracts.
• Closing: Long positions can be closed by selling the asset, while short positions can be closed by buying the asset.

The above is the detailed content of What are long and short positions. For more information, please follow other related articles on the PHP Chinese website!