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Lesson 7 – Concept of Positioning in Forex

Short Position:

Holding a position in which a currency is sold. In forex, when you sell a certain currency, you are going short on the currency. Hence, it is known as short position. A short position is maintained when a currency is sold in anticipation that it will depreciate in value so as to make a profit out of it.

Long Position:

Holding a position in which a currency is bought. In forex, when you buy a certain currency, you are going long on the currency. Hence, it is known as long position. A long position is maintained when a currency is bought in anticipation that it will appreciate in value so as to make a profit out of it.

Stop loss:

In forex trading, when the currency trend of the market goes against your expectation and your assets begin to lose value, you may want to close the position to limit your losses. This is called stop loss.

For example, if you buy USD 10,000 worth of USD/EUR, you are long on USD and short on EUR. You have a short position on Euro and long position on US Dollar.

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