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#2: What is a long position

Lesson 2

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.

I’ll explain…

Forex example:

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.

Next…

Stock example:

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:

  1. Enter on a pullback to the moving average
  2. Enter on a breakout from resistance

I’ll explain…

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:

• Swing Trading Strategies that Work

• The Price Action Trading Strategy Guide

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