A LONG position: buying
Taking a long position means buying an asset in the hope that its price will rise. You gain if the price rises, you lose if it falls. It is the natural direction when the trend is up: prices make higher and higher highs and lows.
A SHORT position: short selling
Taking a short position means selling an asset you do not own (it is borrowed, or you go through a contract), in the hope of buying it back cheaper. You gain if the price falls, you lose if it rises. It is the direction considered when the trend is down.
Fictitious example, no fees
- LONG: buy 10 units at €100, sell at €108: gain of 10 × 8 = €80. Sell at €95: loss of €50.
- SHORT: sell 10 units at €100, buy back at €92: gain of €80. Buy back at €106: loss of €60.
Why short selling is riskier
A price cannot fall below zero: the loss on a long position is therefore limited to the amount invested (without leverage, i.e. without borrowed money that magnifies gains and losses). A price can, however, rise without limit: the loss on a short position has no theoretical ceiling. Shorting is also often more expensive: borrowing fees on shares, “funding” (a periodic payment between buyers and sellers) on cryptocurrency perpetual contracts. A stop-loss (an order that closes the position automatically at a set price) is therefore essential, placed above the last significant high (see where to place your stop-loss).
Trend and trade direction
- Uptrend: you would rather consider buying (LONG).
- Downtrend: you would rather consider short selling (SHORT).
- No trend, or an economic announcement coming up: waiting is often the best decision.
“Considering” does not mean “entering”: you still need a complete plan, a stop, a calculated size and a target that justifies the risk (risk/reward ratio).
Practise in both directions
On BULLSAGE, Paper Trading lets you open “Buy (LONG)” or “Short sell (SHORT)” positions with €10,000 virtual and no leverage. Every engine decision comes with a plain-language explanation that links the trend to the trade direction. To get started, follow the learn trading from A to Z path.
This article is educational and is not investment advice.
Get the trading plan kit (PDF)
The plan to fill in, the eight questions to ask before acting, the position size calculation and a journal template. You will also be told when the platform opens, on 1 January 2027.