What is Long Position and Short Position?

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Cryptocurrency Basics—

What is Long Position?

A long position (often referred to as "long") involves buying an asset with the expectation that it will appreciate. Long positions are commonly used in derivative products or forex trading and are essentially applicable to all asset classes or market types. Buying assets in the spot market and expecting their prices to rise also constitutes a long position.

Taking a long position in financial products is the most common investment approach, especially for beginners. Long-term trading strategies such as buying and holding are based on the assumption of asset appreciation. In this sense, buying and holding is a form of going long.

However, going long does not necessarily mean that traders expect to profit from price increases. Take leveraged tokens, for example: their prices move inversely to the price of Bitcoin. If the price of Bitcoin rises, the price of BTCUSDT (a leveraged token) will fall. Conversely, if the price of Bitcoin falls, the price of BTCUSDT will rise. Establishing a long position in BTCUSDT is equivalent to anticipating a decrease in the price of Bitcoin.

What is Short Position?

A short position (often referred to as "short") involves selling an asset with the intention of repurchasing it at a lower price in the future. Shorting is closely related to margin trading, as traders may borrow assets to go short. However, shorting is also widely used in the derivatives market and can be accomplished through simple spot positions. So, how does shorting work?

Shorting in the spot market is straightforward: suppose you hold Bitcoin and anticipate a price decline. You sell the Bitcoin for dollars, hoping to repurchase it in the future at a lower price. This strategy of selling high and buying low in the future is effectively going short on Bitcoin.

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