Long and short position in forex
You can trade currencies in two directions, opening purchase or sale transactions, depending on the existing situation on the market and the direction of the forex trend.
Depending on the direction in which a new position is opened, it has its own name.
A long position is a transaction to buy a currency, carried out by pressing the buy key in the window for opening a new order.
In this case, the base currency of the currency pair is purchased for the quoted currency at the price indicated in the Forex quote.
This operation is the easiest for a trader to understand; after its implementation, profit is made if the price of a currency pair rises.
Long positions on Forex are opened if there is a dominant upward trend in the market; in this case, there is a constant increase in the price of the currency pair, which makes it possible to make a profit on transactions of this type.
In this case, a stop loss order is placed below the opening level; it will work as soon as the price starts to decline instead of rising and will prevent the deposit from being completely destroyed.
We set the take profit above the existing price by the predicted number of points; in this case, the transaction will be closed with a profit as soon as the price of the currency pair reaches the indicator specified in the order.
If we are dealing with pending orders, then the Buy Stop order will be an analogue of a long position; it also has its own placement features, which you can read about here - http://time-forex.com/terminy/buy-stop
A short Forex position is an operation to sell the base currency, in this case you first sell, and then make a purchase, thereby closing a previously opened transaction.
At first it is difficult to understand how it is possible to sell something that is not available on the Forex market; it is quite possible to carry out such transactions, due to the fact that actual deliveries of currency occur only after a certain period.
Thanks to this, you can first sell an expensive currency, and then wait for it to become cheaper and buy the volume you need at a cheaper price.
Sell operations are carried out if the rate of a currency pair goes down, and there is a possibility, after opening an order, to buy the currency at a cheaper price.
In order to open a short position on Forex, click the sell button in the window for opening a new order.
Stop orders are placed in the reverse order than when opening buy positions, that is, a stop loss order is placed above the opening level, and take profit, on the contrary, is placed below the opening price.
In order to place a pending sell order, we use Sell stop. What features of placing this order have, read here - http://time-forex.com/terminy/sell-stop
For a novice trader, it is recommended to start working by opening long positions and only then switch to short ones, while not forgetting to monitor the direction of the prevailing trend on the selected and older time period.