Forex Market Positions

An investor’s position in financial market trading is expressed in specific terminology. Versing oneself in these terms, especially when a complete novice, will facilitate the trading experience.

Forex Market Position Terminology

  • Long Position

A long position, also known as long, indicates a trader having bought a currency pair. A purchase of a currency pair in the forex market means the base currency has been purchased while the counter currency has been sold. This is vastly different from the stock market.

In a long position, the trader is hoping the prices will increase so the currency pair can be resold for a higher price that what it was originally purchased. To close a long position, what was bought must be sold. If a trader is buying at multiple price levels, it is called “adding to longs or getting longer.”

  • Short Position

A short position, also known as short, indicates a trader selling a currency he never owned. It means the trader has sold a currency pair. The base currency has been sold while the counter currency is purchased. An exchange is made but in the opposite order. This is very different from a short position in the stock market. There, selling a stock short involves borrowing the stock from a lending broker at the expense of paying a fee to do so.

Selling a currency pair is also called “going short or getting short.” A trader in this position is aiming for the pair’s price to go lower so it can be bought back for a profit. Going short is as commonplace as going long in the forex market.

  • Squaring Up

This term is used for traders who have no position in the market. Squaring up is also known as being “square or flat.”