"Long" versus "Short" Position

When you take action to trade, it is best to think in terms of "opening" or "closing" a position based on whether you feel prices will go up or down in a given time frame.

1. Taking a "Long" Position - means that you feel the price of a currency pair will rise over the course of time. To open a position, you will "Buy" a number of "lots" in a given currency pair to take a long position. If the price does rise, you will close your position by "Selling" the number of lots you purchased to take a profit.

2. Taking a "Short" Position - means that you feel the price of a currency pair will drop over the course of time. You would do the complete opposite of the above to initially "Sell" a number of lots in a given currency pair then close the position by "Buying" this back to take a profit. To see a quick example of selling short. click here.

You can view the section with a sample transaction or our Forex Basics for examples.