Long Position
Buying an asset with the expectation that its price will rise, so you profit if it does. This contrasts with a , where you profit if the asset's price falls (typically using derivative trading).
What Is a Long Position?
A Long Position in trading is when a trader buys an asset expecting its price to rise over time. By taking a long position, they aim to profit from selling the asset at a higher price than what they initially paid.
How It Works
- Buying Low, Selling High: In a long position, the trader buys (or "goes long on") an asset, hoping its value will increase.
- Holding Period: The trader holds the asset, sometimes for minutes, hours, days, or even years, depending on their strategy and the market conditions.
- Profit on Sale: When the price rises to a desired level, the trader sells the asset to "cash out" the difference between the buy and sell prices.
Example Use
Say you take a long position in Bitcoin at $25,000, expecting its price to rise. If the price climbs to $30,000, you can sell and earn a profit of $5,000 (minus any fees).
Key Takeaways
- Long Position means you buy an asset anticipating a price increase.
- The goal is to sell the asset later at a higher price to make a profit.
- Common in all kinds of markets—stocks, crypto, commodities—long positions are a fundamental trading approach.
In Short
Taking a long position is about betting on the price to rise, capturing profits when things go up!
Other terms in this Category.