Long & Short Market Positions

In financial markets, long and short positions refer to buying and selling positions, respectively. In plain words, financial markets give you leverage that you can buy then sell, or sell and then buy. These terms confuse novice traders, though it is pivotal to understand both terms to practice trading in real-time.

Long Position:

If an investor has a long position, it signifies that the investor has bought and owns those shares of stocks. A long position known as simply long is buying a stock, commodity, or currency with the anticipation that it will mount in value. Holding a long position is a bullish view of the market outlook. Traders speculate on the fundamentals of financial instruments and thereby decide their position.

Short Position:

If an investor has a short position, it indicates that the investor owes those stocks to someone but does not own them yet. A short position is perplexing to beginner traders as in the real world; we typically have to buy something to be able to sell it. On the other hand, in short selling, traders sell assets before buying them, foreseeing that financial instruments' price will fall.

There is a wide variety of long and short positions that traders may opt for. Skillful traders analyze the market in detail and likewise strategize their position.