Short and long positions in foreign exchange - Inno Foreign Exchange Lecture Hall

1、 Definition


In trading terms, long refers to a position where a trader buys a currency at a certain price with the aim of selling it at a higher price in the future. In this case, investors benefit from the upward market. Short position refers to a trader selling a currency at a certain price in the expectation that it will depreciate. In this case, investors benefit from a declining market. However, remember that everyforeign exchangePosition positions require investors to take long positions in one currency and short positions in another currency.


1Foreign exchange short positions are:


Investors and stock traders believe that although the current stock price is high, they have a negative outlook on the stock market and expect the stock price to fall. Therefore, they sell borrowed stocks in a timely manner and buy them again when the stock price drops to a certain level to obtain differential returns. The trading method of selling first and then buying later to earn the price difference is called short selling. People usually refer to a stock market with a long-term downward trend in stock prices as a bearish market. The characteristic of a bearish market is a series of large declines and small increases in stock prices.


2Foreign exchange bulls are:


Investors are optimistic about the stock market and expect the stock price to rise, so they buy stocks at a low price and sell them when the stock rises to a certain price to obtain differential returns. Generally speaking, people usually refer to a stock market that maintains a long-term upward trend in stock prices as a bullish market. The main characteristic of stock price changes in a bullish market is a series of large rises and small falls.


Long selling and short selling, which are commonly heard in the public;Long、Short. These paired terms, the first one refers to a bullish contract to buy a currency pair, while the latter refers to a bearish contract to buy a currency pair. After buying a bullish contract for a currency pair, it is called the long position of that currency pair, and after buying a bearish contract for a currency pair, it is called the short position of that currency pair.


For example, as we often say: holding euros/A long position in the US dollar indicates that the euro has been purchased previously/The US dollar is currently in a holding position.


2、 Trading strategy


Bull: Do long or look long.


EuroVSUSD: Buy Euro, Sell USD.


USDVSJapanese yen: Buy US dollars and sell Japanese yen.


Short: Short or bearish.


EuroVSUSD: Sell euros and buy USD.


USDVSJapanese yen: Sell US dollars and buy Japanese yen.


Long position refers to investors who are optimistic about the market's upward trend and then buy and sell to earn profits or price differences;Short position refers to investors or speculators seeing the future direction as a bearish trend, so they sell their holdings of German securities and then wait for an opportunity to buy.


Position is a market agreement that promises to buy or sell the initial position of a foreign exchange contract, as expressed in EnglishpositionLet's see, it means location. Buyers of foreign exchange contracts are bullish and in a bullish position;Selling foreign exchange contracts is a short position and in a bearish position.
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