What is Long and Short Position?
Trading consists of two types of positions: Long Positions (or Going Long) and Short Positions (or Going Short / Shorting). Both can be used on both spot and derivatives exchanges like CoinDeal Derivatives.
When a trader is going long, he/she believes the price of the product will be going up, and therefore is willing to buy it. New traders will mostly be going long, as they will want to bet their money on a product that will be rising in its value, and so sell it at a higher price than initially bought at.
A Bull Market Trend (or Bullish Trend) is related to Long Positions because a Bull Market Trend also describes the market continuously going up. The reason for the term ‘Bullish Trend’ comes from the way the animal attacks its prey; a bull will usually run towards it and by using its horns, throw it up in the air. Hence the relation to a growing market.
Example: You buy 1 BTC for $8,000. The price goes up to $10,000. The profit made is $2,000.
(Note this is without leverage, and not including fees).
In real life, you need to own a product before selling it, but in the trading world besides that, you can also sell a product before buying it. And that is exactly how shorting works. When going short a trader believes the price of the product will be decreasing, and therefore will want to sell it. The trader, however, did not own the product before, but is predicting the price will be going down, and in this way will be earning profits from the short position.
Another term for a declining market that is good for shorting is a Bear Market Trend (or Bearish Trend). Just like in the bullish trend, the term ‘Bear Market Trend’ also comes from the way a bear attacks; with massive strength, the animal swipes its paws down on the prey. This is the reason why the Bearish Trend is related to a declining market.
Example: You sell 1 BTC for $10,000. The price goes down to $9,500, allowing you to rebuy it at a lower price. The profit made is $500.
(Note this is without leverage, and not including fees)
Depending on the platform, the exchange will provide two buttons to mark long and short positions. Some might name them “LONG” / “SHORT”, and others “BUY” / “SELL”. On CoinDeal Derivatives, we use a green button marked “BUY” for placing long positions, and a red button marked “SELL” for placing short positions.