What are 'Long' and 'Short' Positions?
A long position, simply put, is when a trader or investor buys an asset, intending to sell it later for a profit when the price goes up. In other words, a long position is betting that the asset's price will rise. For example, if you spend $20,000 to buy one Bitcoin, hoping it will rise to $25,000. If it does rise, selling it would earn you $5,000, not counting fees and such.
A short position is when a trader borrows an asset from a broker, sells it, and intends to buy it back later when the price falls. A short position is betting that the asset's price will drop. For example, if you borrow 10 shares of a company's stock from a broker at $100 per share, then sell them for $1,000. If the stock price does fall to $80, you can buy it back for $800 to return it, making a profit of $200, not counting fees.
In terms of risk:
🔵 Long: The risk is limited; at most, you could lose all the money you invested. For example, if the asset's price drops to zero, you lose everything.
🔵 Short: The risk is much greater because asset prices can keep rising indefinitely. If the asset price skyrockets, you might end up losing much more than your initial investment.
The test of a bull market is not just about the ups and downs of the market; it also tests our mindset. In the face of account fluctuations, we must remain rational. Next, I will announce the next potential tenfold coin! Instead of guessing, let's seize the opportunity! Like + comment, and share freely.
