Going long

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    Traders who have entered the market by purchasing a financial asset are said to be in a long position.

    The opposite of going long is going short.

    It is a useful term that allows traders to distinguish between those who are buying an asset in order to enter into a market position and those who are buying an asset to close a short position.

    If a trader is in a long position, then it is understood that they have bought an asset in the expectation that the market price will increase and will attempt to sell their investment at a higher than they paid for it, in to make a profit.

    For example, in the following scenario, a trader entered a buy position (1) at 1.25205 and then exited (2) with a 16 pip profit at 1.25366.

    Going long

    : an example

    Let’s say you are considering buying 1,000 barrels of oil (oil being an asset or financial instrument). Oil is currently trading at $100 a barrel (so your purchase is $100,000) and you believe the price is going to rise.

    You buy at the intended purchase price of $100,000. The barrel price rises to $120, just as you expected. You sell the 1,000 barrels for $120,000. Going long has made you a profit of $20,000.

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