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Long and Short positions

A Long position is simply one in which a trader buys a market instrument at one price and aims to sell it later at a higher price. In this scenario, the trader benefits from a rising market.

In this scenario, the trader benefits from a rising market.

For example, if a trader thinks that EUR/USD, that currently trades at 1.3082$, will go up, he will open a Long position. If the price does go up, the trader will be able to close his position at a higher price, pocketing the difference between the opening and the closing price of the trade.

Traders that believes that the prices of a specific market instrument are about to rise are called "bullish investors". A market characterized by a rising trend is often called a "bull market".

A short position is one in which the trader sells a market instrument in anticipation that it will depreciate.

In this scenario, the trader benefits from a declining market.

For example, if a trader thinks that EUR/USD, that currently trades at 1.3082$, will go down, he will open a Short position. If the price does go down, the trader will be able to close his position at a lower price, pocketing the difference between the opening and the closing price of the trade.

Traders that believes that the prices of a specific market instrument are about to fall are called "bearish investors". A market characterized by sharp declines is often called a "bear market".