What is Long: How to profit from market ups and downs

Have you ever wondered what Long means because traders always talk about it? In reality, Long and Short are two basic strategies that allow traders to profit from both rising and falling markets. Today, we will deeply understand these two approaches so you can start making confident profits.

Real Trading Example: How Long and Short Work

Let’s look at real-life scenarios. Suppose you are a trader and you hear good news about PEAR company, indicating strong earnings. You think the stock price will go up, so you decide to “buy” 100 shares at $350 each.

If you believe the stock will rise and it does, reaching $400, you can sell for a profit of $5,000. This is using Long — buy low, sell high.

But if you hear rumors that ORANGE company will face export issues, causing its stock to drop, you might choose to “sell first” — short 100 shares at $350 (borrowing shares from your broker). When the price drops to $300, you buy back the shares and return them to the broker, making a profit of $5,000. This is Short — sell high, buy low.

Long Position: Buying to Wait for Sale

Long means placing a buy order when you believe the price will go higher. When you open a Long position, you wait for the price to rise before closing the position by selling.

For example: a trader opens a Long at 41 baht, but the price doesn’t rise as expected and drops to 40 baht. He closes the position and incurs a loss of 1 baht.

Long positions allow you to profit in a bullish market. If you understand Long well, you’ll know how to set appropriate entry and exit points.

Short Position: Selling First to Buy Back Later

Short position means traders sell first, expecting the price to fall, then buy back at a lower price.

Example: a trader opens a Short at 41 baht, expecting a decline, but the price jumps to 42 baht. He must close the position, incurring a loss of 1 baht.

The advantage of Short is that you don’t have to wait for a bullish trend; you can profit when the market drops, offering greater flexibility.

Main Differences Between Long and Short

Long is buying with the expectation that the price will rise; losses occur if the price falls.

Short is selling with the expectation that the price will fall; losses occur if the price rises.

Both Long and Short require derivative instruments such as derivatives, CFDs, TFEX, or BlockTrade. Not all markets allow short selling due to high risk.

Why Are CFDs Popular for Long and Short?

Currently, CFDs make it easy to short stocks without the complicated process of borrowing shares. However, using CFDs involves risk because of leverage, which can lead to losses exceeding your initial capital.

With CFDs, you can trade over 400 assets worldwide, both bullish and bearish, with leverage up to 1:200 to potentially increase returns.

Summary: Understanding Long to Improve Your Trading Skills

Long and Short are two sides of the same coin — both are methods to profit from market volatility. The difference is that Long benefits from rising prices, while Short benefits from falling prices.

By understanding what Long and Short mean, and mastering both, you’ll gain flexibility and more trading opportunities based on your market analysis and risk management.

Remember, derivatives can lead to total loss of your capital. Always read the risk disclosure documents carefully before trading.