Forex long vs short

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Foreign Currency Trading.

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Currency Trading Long and Short Positions.

Among the most used Foreign currency definitions for currency trading are long and short positions.

A long position is made when the trader buys a currency. The long position is made by the investor if he expects the currency to later rise in value. If that happens, he will be able to sell the currency he bought for a higher price than what he paid for it. In this case, the trader can benefit from a market that is on the rise.

An example for a long position is given for USD/JPY currency quote worth 114.34 / 38. The long position will be done for 114.38, meaning the ask price.

A currency trading short position is maintained when a trader sells a currency in the expectation that it will depreciate in value. Contrary to common sense, for this trade the investor wants the currency to drop, and only then will he make a profit.

In order to decide which position to enter, you need to get familiar with technical analysis and get to know the different indicators of the market direction.

Using the right forex trading strategy, you'll be able to place the right position, either long or short, and benefit from the increase in the direction you expected.

Posted by Richard Hollar.

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Forex long vs short.

Forex trading is a transaction of buying and selling of different currencies through a broker. The traders make profits from the changes in exchange rates. This field is becoming very popular in different parts of the world. If you can do it rightly, it is a profitable business.

But do you know exactly how to start forex trading? At first, get enough knowledge of different terms related to forex, then understand the strategies. After that, choose an experienced broker for doing trading activity. Create your forex account. Once you complete all these steps you will be completely ready to act as a foreign exchange trader.

What are the benefits of forex trading? There are many of them.

If you do it properly, you will be able to make huge profits. It is the most liquid financial market. Trading activity increases smartness in a person. It allows the investor to trade directly with the market. There is no middleman in the forex trading. You can join the trading activity at any point of time. You can choose the time of trading the way you want. It is very convenient for the part-time trader. In forex, you can decide your own lot size. Transaction cost is generally low in forex trading.

Concepts of Long and Short in Forex Trading:

Long position is made when the trader expects that the value of the currency will rise later. In this case, a trader buys a currency pair at a certain price and then hopes to sell that currency pair later at higher price. An investor can make benefit from the rising market.

Short position is created when the market falls. In this case, a trader sells a currency pair to purchase it back at lower price. In order to understand which position to enter, you need to get familiar with the technical analysis.

One question may arise in your mind. What are the basic differences between long and short in forex trading. Check them all out.

For pessimists, short selling is a good way to play with forex market. On the other hand, buying long positions is a good way to make money for the eternal pessimists. Long position investment is the most prevalent type of trading.

Benefits of Long Position Forex:

Many advantages make long position special.

The relationship between volatility and time is a major advantage of long position trading. If you put your money in long position investment, it will provide tax advantage on the capital gain. Once a trader becomes a long position trader, he should choose some investments and risk tolerance based on his trading risks. Long position investment is very easy which anyone can do.

Benefits of Short Position in Forex:

There are many advantages of short position as well.

Short position provides the chance to develop a part of capital at a fast pace. It gives the opportunity to keep the traders’ hands busy. But short position trading is not suitable for everyone. It is difficult because it takes a lot of experience and time to be an expert.

Thus, from the above discussion, hope you get enough information about the various aspects of forex trading. However, if you have any thought that you would like to share with us on this topic, you can write in our below comment section. We will be delighted to hear from you.

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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The differences between long and short forex positions are very distinct. As a matter of fact, they are the exact opposite of each other. These positions are one of the.

Forex, going long or short position is synonymous with every trade carried out in the for.

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The Long and Short of it.

Price action and Macro.

Aspiring traders will often be familiar with the concept of buying to initiate a trade. After all, since many of us are children we are taught the basic premise of ‘buying low, and selling high.’

In financial markets, jargon often plays a key role. Jargon helps show familiarity and comfort with a particular subject matter, and nowhere is this jargon more apparent than when discussing the ‘position,’ of a trade.

When a trader is buying with the prospect of closing the trade at a higher price later, the trader is said to be going ‘Long,’ in the trade. The following graphic will illustrate the dynamic of a long position:

Created by James Stanley.

While this premise may seem easy enough, the next may be slightly more unconventional to new traders.

The concept of selling something that isn’t already owned may prove as a confusing concept, but in their ever-evolving pragmatism traders created a mannerism for doing so.

When a trader is going ‘Short,’ in a trade, they are selling with the goal of buying back (to cover the trade) at a lower price. The difference between the initial selling price, and the price at which the trade was ‘covered,’ is the traders profit to keep less any fees, commissions, or selling expenses. The chart below illustrates a ‘Short,’ position.

Created by James Stanley.

It’s important to note the interesting distinction between currencies and other markets. Because currencies are quoted with two sides (each quote references 2 different currencies taking opposing positions), each trade offers the trader long and short exposure in varying currencies.

For example, a trader going short EUR/AUD would be selling Euro’s and going long Australian Dollars. If, however, the trader went long the currency pair – they would be buying Euro’s and selling Australian Dollars.

--- Written by James B. Stanley.

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