Learning Forex: What Does Going Long or Short Mean?

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Learning Forex: What Does Going Long or Short Mean?

Going long and selling short are fundamental ideas in day trading that every aspiring trader should understand. But for those beginning to learn about Forex trading, each term can be difficult to define. What exactly is short selling and going long? What are the advantages of either trading strategy? In the simplest terms, a trader can make money by buying low and selling high (going long) or by selling high and buying low (selling short). Forex day traders, then, have two specific ways to profit in a trade. They can enter the market when the price is highest or at a low, enabling them to make money in up-trending and down-trending markets. With stocks, there is a bias for bullish movement in the markets; stocks are more likely to move in an upward. But the Forex markets are more volatile; prices may fluctuate in both directions fairly consistently. With short selling and buying long, traders have an opportunity to profit in whichever way the market is trending, and as currency pairs tend to oscillate in either direction, there is more opportunity to use short selling in Forex trading.

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