Long
A position that profits when the price rises.
Also called: go long · buy side · long position
In plain language
Going long means buying with the expectation of selling higher. It is the default direction most people mean by "investing".
On a long trade the risk sits below your entry and the reward sits above it. Your stop loss belongs under the entry price, because below is the direction the trade loses.
The most you can lose on an unleveraged long is the full position value, because price cannot go below zero. The upside has no fixed ceiling.
Seen on a chart
Why it matters
Direction determines which side of your entry the stop belongs on. Getting this backwards is the single most common way a position size calculation goes wrong.
Common mistakes
- Placing the stop above the entry on a long, which turns the risk calculation negative.
- Assuming long is inherently safer than short. A long in a collapsing asset loses just as fast.
Keep exploring
These concepts are connected. Understanding one usually makes the next one easier.
A position that profits when the price falls.
The price at which you open a position.
The price at which you close a position, whether at a profit or a loss.
A predefined exit that closes a losing trade before the loss becomes serious.
The amount of an asset you buy or sell in a single trade.