Short position.

When trading on the stock exchange, there are only two options for the direction of transactions - buy and sell; you either buy or sell the underlying asset. This is why an open transaction will be called a short or long position.

Short position – a transaction to sell an asset (currency, shares, goods or raw materials). When carrying out this operation, the trader sells an asset that he does not have in stock, hoping to later buy it at a better price. Another similar contact is sometimes referred to as a sales transaction, so it is more understandable to a non-professional.

A short position is generally opened if there is a decline in prices in the market and there is a steady downward trend.

The scheme for making a profit is that a trader, selling a product at a higher price, waits for the rate or cost of the product to drop to a favorable level and closes the deal with a purchase. The principle of such trading can be most clearly understood from a specific example.

For example , the price of oil is currently $117 per barrel; there is a high probability that in a week it will become significantly cheaper due to the emerging warming. Therefore, a short position is opened to sell oil at a price of 117 with a volume of 1 lot in the amount of $11,700, our forecast was confirmed, and the cost of a barrel of oil actually dropped to 109. Now we close our transaction by buying oil at a price of $10,900. As a result, it is not difficult to calculate that our profit was $800.

A short position is opened using the trader's trading terminal ; when you press the F9 key, a pop-up window appears in which you select a trading instrument, set the transaction volume and other additional parameters.

Then we press the Sell button and our short position is opened. In order to complete the operation, you just need to select the required order in the “Trade” window and use the right mouse button to open a submenu in which to select “Close order”.

For beginners, at first it is quite difficult to understand how to sell an out-of-stock product (open a Short position), so it is advisable to start Forex trading using long positions .