Long and short positions on Forex
Currency trading can be conducted in two directions, opening buy or sell transactions, depending on the current market situation and the direction of the forex trend.
Depending on which direction a new position is opened, it has its own name.
A long position is a transaction to buy currency, carried out by pressing the buy button in the new order opening window.
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 type of operation is the easiest for a trader to understand; after its implementation, profit is made if the price of the currency pair rises.
Long positions on Forex are opened when the market is experiencing an upward trend. In this case, the price of the currency pair increases steadily, making it possible to profit from this type of trade.
In this case, a stop-loss order is placed below the opening level; it will be triggered as soon as the price, instead of rising, begins to fall, preventing the deposit from being completely destroyed.
We set the take profit above the current price by the predicted number of points. In this case, the transaction will close with a profit as soon as the price of the currency pair reaches the level specified in the order.
If we are dealing with pending orders, then the analogue of a long position will be a Buy Stop order; 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 a transaction to sell the base currency. In this case, you first sell and then buy, thereby closing the 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 the actual delivery of currency occurs only after a certain period of time.
This allows you to sell the currency at a high price first, and then wait for it to become cheaper and purchase the required volume at a lower price.
Sell transactions are carried out when the exchange rate of a currency pair goes down and there is a possibility of buying the currency at a cheaper price after opening the order.
To open a short position on Forex, click the sell button in the new order opening window.
Stop orders are placed in the opposite order than when opening buy positions, that is, a stop loss order is placed above the opening level, and a take profit order, on the contrary, is placed below the opening price.
To place a pending sell order, we use Sell Stop. You can read about the specifics of setting this order here - http://time-forex.com/terminy/sell-stop
For a novice trader, it is recommended to begin by opening long positions and only then move on to short ones, while remembering to monitor the direction of the prevailing trend on the selected and higher timeframes.
