Short position.

When trading on the exchange, there are only two possible trade directions: buy or sell. You either buy or sell the underlying asset. This is why an open trade is called a short or long position.

A short position is a transaction to sell an asset (currency, stocks, commodities, or raw materials). In this transaction, a trader sells an asset they don't own, hoping to buy it back later at a more favorable price. This type of transaction is sometimes referred to as a "sell" transaction, as it's more understandable to non-professionals.

A short position is typically opened when the market is experiencing a decline in prices and a sustained downtrend. The profit-making scheme involves selling a commodity at a higher price, waiting for the exchange rate or price to drop to a favorable level, and then closing the deal with a buy.

The principle of this type of trading can be best understood with a specific example.

For example , the price of oil is currently $117 per barrel, and there's a high probability that it will fall significantly in a week due to the upcoming warming. Therefore, a short position is opened selling oil at $117 for 1 lot, amounting to $11,700. Our forecast is confirmed, and the price of a barrel of oil does indeed fall to $109. Now we close our trade by buying oil at $10,900. As a result, it's easy to calculate that our profit is $800.

Opening a short position is done through the trader's trading terminal . Pressing F9 opens a pop-up window where you can select a trading instrument, set the trade volume, and other additional parameters. Then, click the Sell button, and your short position is opened.

To complete the operation, simply select the desired order in the "Trade" window and right-click to open the submenu. Select "Close Order."

For beginners, it can be difficult to understand how to sell an unavailable item (open a short position), so it's recommended to start trading Forex with long positions .