Long vs Short Positions Explained
Going long and going short are the two fundamental trading directions. Understanding how short selling works is essential for every trader.
Basics · May 23, 2026 · 4 min read
Going long means buying an asset expecting its price to rise. You profit when price goes up and lose when it goes down. This is the familiar direction most investors understand. Going short means selling an asset you don't own — borrowing it to sell now, with the obligation to buy it back later. You profit when price falls.
How Short Selling Works
In practice, your broker handles the borrowing automatically. You click 'sell' on a CFD or futures contract, and you're short. If you short a stock at $100 and it drops to $80, you buy it back at $80 for a $20 profit per share. If it rises to $120, you lose $20 per share. Your maximum gain on a short is 100% (if price goes to zero); your maximum loss is theoretically unlimited.
Short Selling in Practice
Not all instruments can be shorted. CFDs, forex, futures, and crypto perpetuals all allow shorting easily. Individual stocks require shares to be available for borrowing, and some brokers charge borrowing fees on hard-to-borrow stocks. In forex, going short simply means selling the base currency — there's no borrowing involved.
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