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Trade
What is long and short position - long and short positions
It is known that in financial markets you can earn not only on the growth rate of the asset, but the fall in its value. The Forex market is no exception, but because here you can earn money even if the trading price of the instrument is reduced.
The feature of the trading is that we can even sell what we have, if we believe that the price of the asset will decrease. Thus, in the currency speculator immediately you have two options: to conclude a deal to buy, a deal on sale.
Long position (long) - agreement for the purchase of a volume of a trading instrument.
Short position (short) - agreement on the sale of a volume of a trading instrument.
Technically, the trader performs the same action, regardless of whether it is on the market to buy or sell.
Long position refers to any trading transaction on acquisition tool (operation buy). Short position in the markets is called the agreement on the sale of instrument (agreement of shorts). For example, if a trader says: "today I got in long at Evreux", it means that the person opened a buy position on the currency pair Euro/dollar.
Features long and short positions in the trade
From the technical point of view, as mentioned earlier, there is no difference, we will open a position for buy or sell. If to speak about the peculiarities of the behavior of market prices, the difference is, You will probably be able to notice in working with long and shorts.
The fact is that when working with similar tools, as noted by some traders, the increase in the price of the asset is going slower than the fall. What is meant by "uniform instruments"? Here are some examples:
• trade gold.
• asset share of the company;
• speculation on currency pair.
In the first two cases the product (the asset) is bought and sold for hard currency, e.g. US dollars. In a third embodiment, one currency is bought for other moneys. The nature of the trading instruments in the first two cases is different (gold and dollars, dollars), and in the third case of the same (e.g. the Euro and the dollar - both tools are currency).
In this regard, if you work with such tools as stocks, commodities, and so forth, it is occasionally possible to see a gradual growth and a fairly rapid fall in the market price. When working with currencies this effect is "blurry" as psychologically the two are treated the same.
Some trading systems vary in their conditions for long and short positions. In rare cases, the system of the trader can be created, for example, only for short transactions. This means that the person takes into account any difference in the behavior of the market with the rise and fall that uses in its work.
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| Category: Forex | Added by: (06.11.2017)
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| Views: 257
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