Going long and short
Also called Long and short positions, Going long, Going short, Long vs short, Buy and sell
Going long and short are the two directions of a trade. Going long means buying first so you profit if price rises. Going short means selling first so you profit if price falls.
The direction you choose decides whether each pip earns you money or costs you money. This page uses one illustrative example throughout: 1 standard lot of EURUSD, which is 100,000 units worth $10 per pip. Price falls 50 pips, from 1.0850 to 1.0800. A short opened at 1.0850 gains $500, and a long opened at the same price loses $500. The chart below shows this one move from both sides.
A long opens with a buy, a short opens with a sell
Every trade has one buy and one sell. A long opens with a buy and closes with a sell. A short opens with a sell and closes with a buy. The only difference is which one comes first.
In spot forex, CFDs and futures, you don't need to own anything to go short. Your broker lets you open a sell as easily as a buy. With futures, you sell a contract and buy it back later. Real shares work differently. To short them, your broker lends you the shares, and you pay a borrow fee for as long as the short stays open.
In forex you are long one currency and short the other
A currency pair prices one currency against another. When you buy EURUSD, you buy euros and pay for them with dollars. So one trade makes you long the euro and short the dollar. The diagram below shows both legs for each direction.
The direction always refers to the base currency, which is the first currency in the pair. If you expect it to strengthen against the second currency, go long. If you expect it to weaken, go short.
Traders often get this backwards when their view is on the second currency. Say you think the yen will strengthen, so USDJPY should fall from 150.00 to 148.00. That is a short: you sell dollars and buy yen.
Working out profit or loss on a long or a short
Use one formula for each direction:
- Long: (exit price − entry price) ÷ pip size × pip value
- Short: (entry price − exit price) ÷ pip size × pip value
A positive result is a profit and a negative result is a loss. Pip size is 0.0001 on most pairs and 0.01 on yen pairs. So the USDJPY short above makes (150.00 − 148.00) ÷ 0.01 = 200 pips. To turn that into money, multiply by your pip value, which on yen pairs is not $10 per lot. The calculation below works through the EURUSD short from the chart.
Now say price had risen to 1.0900 instead. The short gives 1.0850 − 1.0900 = −0.0050, which is −50 pips and a $500 loss. Before the spread, a long from the same entry gives the opposite results: −$500 at 1.0800 and +$500 at 1.0900.
Where your stop loss and take profit go on a long vs a short
The bid is the price you can sell at. The ask is the slightly higher price you can buy at. The table below shows where each order and level goes.
| Long | Short | |
|---|---|---|
| Open with | Buy, filled at the ask | Sell, filled at the bid |
| Close with | Sell, filled at the bid | Buy, filled at the ask |
| Stop loss | Below entry | Above entry |
| Take profit | Above entry | Below entry |
| Pending entry on a pullback | Buy limit, below current price | Sell limit, above current price |
| Pending entry on a breakout | Buy stop, above current price | Sell stop, below current price |
A sell limit waits above the current price so you can short into a rally. A sell stop waits below the current price so you can short a breakdown.
Beginners who are used to longs often put a short's stop below entry. On a short, a level below entry is where you take profit, not where you cut a loss. Most platforms reject that stop as invalid.
Why a short's stop can trigger before your chart touches it, and who pays the swap
Charts usually show the bid price, but a short closes at the ask. When the spread widens around news, the ask can reach your stop while the bid line on your chart stays below it. In the levels below, the bid peaks just under the stop, while the ask goes through it.
A position you hold past the daily rollover also pays or earns a swap. The rollover is the end-of-day cutoff when open trades are carried over to the next day. The swap depends on the interest rate gap between the two currencies, and the broker adds a markup. If you plan to hold past rollover, compare the long and short swap rates in the symbol's specification. If your direction pays, count it as a daily cost against your target.
Checks before you go long or short
- Say the order out loud: "I'm buying ___ and selling ___." Both blanks should match your view of each currency.
- If your stop is below entry on a short, you have built a take profit, not a stop.
- Give a short's stop extra room for the spread, because the ask is the price that triggers it.
- Before you hold a trade for days, check the swap rate for both directions.
FAQ
Is going short riskier than going long?
In stocks and crypto, a short's loss has no ceiling and a long's stops at zero. In forex, every trade is long one currency and short another, so neither direction is riskier in itself. Your stop sets the risk. The uncapped risk matters most in stock and crypto short squeezes. In a squeeze, many short sellers rush to buy back at once, and that pushes the price up fast.
Can I be long and short on the same pair at the same time?
Only on a hedging account. There, a buy and a sell on the same symbol stay open side by side. With equal sizes, your net exposure is zero, but you pay the spread and swap on both. On a netting account, a new order is merged with your current position. A sell reduces or closes your long, and a buy adds to it. Your broker states whether the account is hedging or netting when you open it.
How do you go long or short on crypto?
Most retail traders use CFDs, futures or perpetual contracts, which let you sell first just as in forex. The direction and stop placement rules on this page work the same way. Perpetual contracts have a regular funding payment that passes between longs and shorts instead of a swap. Whether longs or shorts pay it changes with market conditions.