What is short and long on the stock exchange and Forex?

What is short and long on the stock exchange and Forex?

What is short and long on the stock exchange and Forex?

Every trader has heard such English-language terms as long or short at least once in their life. What is it? We will try to disclose in this material.

This is important for all traders who want to achieve certain success not only on Forex, but also on the stock exchange. After all, understanding what is short and long on the stock exchange, you can consider different Forex trading strategies and understand what is being discussed, and not remain in the guesswork.
What is short and long on the stock exchange?

On the exchange, as on the Forex market, traders can open Long (long) positions or Short (short). It is important to know what long and short positions are. Let's consider each concept separately.
Long positions

When buying securities, the trader opens a long position. That is, it is assumed to buy securities at one price, and after a time when their price will be higher, the assets will be sold. A long position opens with a BUY order, and closes with a SELL order.

long Forex

Figure 1. Long positions.
Short positions)

A Short position is opened on the exchange when a trader borrows securities from a broker in order to sell them. A trader opens a short position only if he is sure that the price of securities will fall. Thus, the player borrows securities from the broker at one price and after a while closes a short position at a low price (buys the securities). The player's profit is based on the difference in the purchase and sale prices.

short Forex

Figure 2. Short positions.

Short sales are triggered by a SELL SHORT order. The operation of closing a short position is called CLOSE SHORT.
Short and long on Forex

The concept of short and long is found not only on the stock exchange. A Forex trader should understand the difference between short and long on Forex, as this is the main thing you need to know.
Short position on Forex (short)

So, short Forex is a trade opened by a trader for a particular currency pair on the Sell order. Market participants open Short positions when they assume that the market will move in a bearish trend line or there should be a correction in the uptrend. This name was taken from observations of the behavior of currency assets. The price often takes longer to move up than down.

Throughout history, global markets have suffered many crashes. The first collapse occurred in the 17th century. Then there was world war I, and then the Great depression. People could lose all their money in a day, because there was a lightning fall in the currency, that is, the price fell in a short time. Here is also where the name Forex shorts came from.

When does short appear on Forex? A short position is opened by a trader when the trader decides to submit a particular currency pair. For example, let it be a sale of the GBP/USD pair. It is assumed that the player wants to sell the British pound for a dollar. At the same time, it will open a long position on the US dollar.

If you compare Forex and the stock exchange, a short position on the Forex market is no different from a long one. However, it is not possible to enter the short position on some assets on the exchange. Also, stock indexes are constantly growing in a normal global economy. In parallel with them, there is an increase in such currencies as the British pound, Swiss franc, and Euro. In General, the currencies of the EU zone are more likely to rise than fall. But recently, this trend has not been observed.

Short positions are mostly opened within the day, based on fundamental data or technical analysis.
Long position on Forex (long)

A long Forex position is when a trader opens a Forex order at a single price, and when that price has increased, he closes it, earning money from it. In other words, the player counts on the growth of the selected currency pair to make a profit.

To open a long position on the Forex market, you can use the Buy button or by placing pending Buy Stop or Buy Limit orders.

A long position is closed by take profit or manually during a pullback, which may change the uptrend. It is always necessary to open positions in the long line on the uptrend on the higher timeframes (from H4 to W). Risks are significantly increased if a trader opens long positions against a global trend.

We hope You understand what long and short are in trading and what they eat it with.v

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