What Does Going Long Or Short Mean?

GBPSDG

What Does Going Long Or Short Mean?

You might be wondering what it means to go long or short in the forex market. It’s not as complex and confusing as you would think, so we’re going to break down both for you!

Going long typically refers to buying a currency with an expectation that its value will rise relative to your purchase price.

Going short is when an investor sells something they don’t own because they believe the item’s worth will decrease over time. Going short can happen even if someone doesn’t actually have possession of a security—then known as selling “naked shorts”. Letting traders sell without owning them is a risky business indeed; but there are some strategies out there that offer protection against downside risk.

Let’s say you went long on gold, what does this mean?

In this scenario the investor believes that gold prices will rise. They buy a position in gold and hold it for an agreed amount of time, hopefully allowing them to cash out before their investment has lost its value.

The price goes higher than what you paid, but then on the way down it becomes cheaper than when you bought it (compared with other currencies). This is called taking a paper loss or being underwater since your initial investment would be worth less now than at purchase time because of depreciation against fiat currency like USD.

Gold can also go above where you initially purchased it from – even if only by cents per ounce – which means that going long was still profitable!

If the price falls below your original cost, however, investors loose the capital.

Now the opposite is true if you went short gold, you would have made money if the price fell.

The important thing about going long or short is to make sure you know what your risk tolerance level is, because it could be costly in either direction.

A lot of traders are interested in taking on more risk for potentially higher rewards by investing in stocks that go up and down quickly, but this can also mean possible bankruptcy. Others prefer a slower pace with less variability, buying bonds as an example – which offer steady returns over time at a fixed interest rate. The key word here again is ‘risk’. You need to understand how much volatility you’re willing and able to take on before committing any capital.”

“Risk means reward,” so some people like the idea of risking their capital, but others fear it in the end.

 

Frustrated Man

Develop a Strategy

No matter what side you take you must understand how the markets move, and what you are willing to risk.

The key word here again is ‘risk’. You need to understand how much volatility you’re willing and able to take on before committing any capital.

“Risk means reward,” so some people like the idea of risking their capital, but others fear it in the end.

No matter what side you take, understanding markets can be a good way for success (or not). There’s no one right way – every market has its own style and nuances that must be understood if trading or investing will work out well.” “You have got to know when to hold em’…and now we all get our chips back.” Everybody needs an edge; this article may help! The author knows something

Earning the Edge

Understanding Forex Markets

The forex markets are a hot topic for many traders and investors. Some people like to think of it as gambling, but I want you to understand that there is more than luck involved in this game. To those who have traded or invested before, they will tell you that understanding how different market styles work can be an edge when trading – no one knows better than me! The best way to get started is by knowing what questions make up “the basics” of forex markets…

logo grad

THE RUMPLED ONE

The rumppled one

Psychology In Trading

Psychology In TradingPsychology In Trading   If you are a Trader and do not think that Psychological games go on, then you have been Mis informed about trading. This happens all the time in trading and the truth is the brokers and wall street do not...

Organic Trading

Organic TradingOrganic Trading   I heard this phrase the other day watching YouTube, and literally laughed out loud.You younger guys always trying to put a new spin on a old horse. In my day we just called it trading naked. Now what does all this mean?...

Can Dropshipping Make As Much Money As Forex Trading?

Can Dropshipping Make As Much Money As Forex Trading?Can Drop Shipping Make As Much Money As Forex Trading?   The problem with this mind set is weather or not you can make more money drop shipping or with forex is. It's a debate that's being discussed...

Can You Get Rich By Trading Forex?

Can You Get Rich By Trading Forex?Can You Get Rich By Trading Forex?     I get this question at least ten times a month if not more, especially from those looking to trade (for profit) in the financial markets. I've been trading for about 15 years,...

How To Read A Forex Chart

How To Read A Forex Chart.How To Read A Forex Chart   One of the reasons people fail at trading they need to look back at who taught them to begin with. You see the reason 97% fail is plain and simple the information out there and that is the truth. I...

Why Do I Keep Losing Money Trading Forex?

Why Do I Keep Losing Money Trading Forex?Why Do I Keep Losing Money Trading Forex?   Why do i keep losing money trading forex is a question we hear on a weekly basis. If you have been trading for an extended period of time it's more than likely that you...

Can You Buy And Hold Currencies?

Can You Buy And Hold Currencies?Can You Buy And Hold Currencies?   Can You Buy And Hold Currencies like a stock? Does it Happen? Yes! You can buy and hold currencies the same way that you would stocks or other assets. If the currency has a $1 USD value,...

Should You Start Trading?

Should You Start Trading?Should You Start Trading? I get asked this almost weekly by folks learning about trading. "How do I get started?" "Should I start trading?" "What does it take to trade?". Anyone who is new to the trading game has questions about what...

Should You Trade Everyday?

Should You Trade Everyday?Should You Trade Everyday? If you are new to forex and wonder if you should trade everyday, The answer is no. There are benefits and drawbacks to trading every day. The markets in forex tend to range a lot. In other words, price...

Why Forex Trading Is Bad

Why Forex Trading Is BadWhy forex trading is bad, should not be the question here. The question should be, how can trading in the capital markets help you? The reasons people forex trading is bad are many and varied. The following are some of the most...
U.S. Government Required Disclaimer – Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.