The long and the short of it

What does Going Long and Going Short Mean in Trading?

When trading in the financial markets, people buy and sell assets such as currencies, commodities and stocks by “going long” or “going short” on them. Going long is a popular industry term used to describe the act of buying. On the flipside, going short is a term investors and traders use to describe the act of selling. Traders will go long when they expect that the price of the asset will rise. Alternatively, they go short when they expect that the price will fall. This is because in forex, as well as all other markets and businesses, traders make their profits when they buy low and sell high.

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So, for example, if someone goes short on the EURUSD, they are expecting the price of the EUR to fall so that they buy it at a lower price and make a profit. Losses are incurred in the event of buying low and selling even lower, or selling high and buying even higher. Whether traders buy or sell first doesn’t matter, profits and losses can be made in any order.

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Risk Warning: There is a high level of risk involved with trading leveraged products such as forex and CFDs. You should not risk more than you can afford to lose, it is possible that you may lose more than your initial investment. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. If the risks involved seem unclear to you, please seek independent financial advice.

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Risk Warning: Trading Forex and Leveraged Financial Instrumentsinvolves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors.Trading non-leveraged products such as stocks also involves risk as the value of a stock can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results.Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary. It is the responsibility of the Client to ascertain whether he/she is permitted to use the services of the FXTM brand based on the legal requirements in his/her country of residence. Please read FXTM’s full Risk Disclosure.

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