What is a position?
You can take one of two positions when trading assets. If you think an assetâs value will go up, youâll take a long position. If you think an assetâs value will go down, youâll take a short position.
Where have you heard about positions?
You may have heard in the news of traders 'shorting' a stock, a strategy that means taking a short position in the hope the stock falls in value.
Key takeaways
When trading assets, there are two positions: a long position for when you expect an asset's value to increase, and a short position for when you expect it to decrease.
Going long involves buying stocks or other assets you believe will appreciate in value, allowing you to profit by selling them at a higher price than you paid.
Going short means borrowing shares from a broker and selling them on the open market, then buying them back at a lower price to return to the broker once the value falls.
The main risk for investors going long is that the asset's value falls resulting in a loss, while the main risk for short positions is a rise in the borrowed shares' value.
What you need to know about positions.
If you decide to âgo longâ, youâll buy stocks or other assets that you believe will go up in value. If youâre right, youâll make a profit by selling them for a higher price than you paid.
âGoing shortâ means borrowing shares from a broker and selling them in the open market. Once the sharesâ value falls to a certain level, youâll buy the shares back and return them to the broker.
For investors going long, the main risk is that the value of the asset they own falls, resulting in a loss. The main threat for those going short is a rise in the value of the shares theyâve borrowed.