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.

Sponsored Content

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.”

Wiley University Services maintains this website. We are an advertising-supported publisher and are compensated in exchange for placement of sponsored education offerings or by you clicking on certain links posted on our site. This compensation may impact how, where and in what order products appear within listing categories. We aim to keep this site current and to correct errors brought to our attention. Education does not guarantee outcomes including but not limited to employment or future earnings potential. View Advertiser Disclosure
Wiley University Services

©2024 All Rights Reserved.