In Forex trading, you can take long or short positions based on expectations of the market rising or falling. Long or buy positions are maintained when traders expect currency pair prices to increase in the future. Traders take short or sell positions if they expect the currency pair prices to decrease in value in order to minimize losses.
What is a Forex position?
A Forex position is the total amount of currency owned by an individual who trades the price movement of the currency against another.
It mainly has three characteristics: the currency pair, size, and direct (long or short).
What are long and short positions in Forex trading?
- Long position
Traders open a long position if they expect the currency pair prices to appreciate. They hold onto the position for as long as they want to profit from the subsequent increasing prices.
Traders who wish to enter long positions always look for buying signals, which can be identified when a currency drops to a level of support where the price stops falling and trends upwards. - Short position
Traders open a short position if they expect the currency pair prices to depreciate. When prices fall, traders buy the currency pair at a lower price to profit from the difference between the buying and selling price.
Traders who wish to enter a short position look for sell signals in the Forex market that can be identified at the level of resistance. This is where currency prices peak, change direction and start to fall.
How long can a Forex trader hold long and short positions?
You can hold a Forex position for as little as a few minutes to as much as a few years. The time you hold onto the currency pair can depend on your goals. The decision to hold onto a position can be based on economic indicators and your Forex trading strategy.
Some Forex traders hold positions for weeks and months who wish to make decent profits over a medium-term period. In the end, holding onto a Forex position depends on your Forex entry and exit strategies along with your investment objectives.
Long and short position trading strategies
- Position trading
Position trading is a long-term strategy that allows you to hold a Forex position for a long period, usually a few months to years. This strategy enables you to ignore short-term price fluctuations and rely on broader and fundamental long-term trends. One of the best ways to utilize a position trading strategy is to take positions in a market expected to have major long-term trends. Traders aim to capture trends that run for weeks, months, and even years as it does not require a lot of time on the trader’s part. - Day Trading
Day trading works for traders who wish to open a short position. In day trading, the trader is affected by all events that cause short-term market movements. Even a minimal change in the currency pair price affects their trades significantly. Traders capitalize on small price movements in liquid currency pairs. Trading strategies like scalping and range trading help them make several small profits on the smallest price changes throughout the day.
Go long or short with Blueberry
Going long or short allows you to place ideal trades by applying the right techniques and strategies in Forex trading. It is important to decide if you want to hold onto a position or sell to make the most of market conditions. With Blueberry , you can study different charts, trends, and price movements that can help you decide if you should short or take a long position instead.
You can sign up for a live trading account on Blueberry to go long or short on today’s top Forex pairs.