#2: What is a long position
What is a long position
If you enter a long position, it means you want to buy a financial instrument.
You’re bullish about the market.
You expect the price to go up in the future.
The exact opposite of a long position is a short position.
Let’s say EUR/USD is 1.1234 right now.
If you’re bullish on it, you can enter a long position at 1.1234.
This means that you’re buying EUR and selling USD.
And if you sell EUR/USD at 1.1334, you’ve earned 100 pips.
Let’s say Apple share price is $100 at this moment.
If you’re bullish on Apple’s share price…
You’ll enter a long position and buy its shares at $100 each.
And if you sell your Apple shares at $120 each, you’ll bag a gain of $20 per share.
When do you enter a long position?
Here are two scenarios to enter a long position:
- Enter on a pullback to the moving average
- Enter on a breakout from resistance
Scenario #1: Enter on a pullback to the moving averages
If the price is above the moving average, then the market is in an uptrend.
If the market is in an uptrend, then enter a long position when price pullbacks to the moving average.
Here’s what I mean:
Scenario #2: Enter on a breakout from resistance
If the price consolidates near resistance, then chances are that the resistance will be broken.
If price breaks above resistance, then enter a long position on the breakout.
Now, here’s the thing:
There’s honestly no fixed way to enter a long position.
You’ll have to find the trading style that suits you over time.
If you want to learn more, go check out: