A position in Forex trading is a trade that you have made or plan to make. You can either buy or sell currencies, this will then create a position in the market.

WHAT DOES IT MEAN TO HAVE A LONG OR SHORT POSITION IN FOREX?

“Long” refers to a trading strategy where an investor buys the underlying asset. “Short” denotes the sale of an asset that the trader does not own. For example, if a trader believes that EUR/USD will rise in value they will buy (go long) EUR and sell (go short) USD. Conversely, if they believe that EUR/USD will fall in value they would sell (go short) EUR and buy (go long) USD.

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WHAT IS A LONG POSITION AND WHEN TO TRADE IT?

A long position is when you buy a currency pair with the expectation that the value of one currency will go up relative to the other. A trader who has taken a long position in EUR/USD, for instance, would expect that the euro will increase in value and thus buy euros with US dollars.

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As a result, if they were correct in their estimation that EUR would appreciate against USD, and the price moved accordingly, then they will have made a profit on their trade. It’s important to note that traders can take both short and long positions in any currency pair, but usually, only one position at a time as traders cannot be taken both long and short positions on one currency.

WHAT IS A SHORT POSITION AND WHEN TO TRADE IT?

A short position is when you sell a currency you do not own or have any exposure to. Short positions are considered bearish and can be used to take advantage of market declines. As a trader, if you think the USD will depreciate against EUR, then you would be short USD/EUR. This means that if the market declines, your position will benefit from this movement because there is an initial loss in value for every traded unit of USD. For example, if the USD trades at 1.01 EUR and it decreases by 10% to 0.90 EUR, then you gain 10 Euros for every $1USD (10 x $1 =$10) which equals a 100% return on your trade.

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