Long and Short

As a binary options trader you will often be confronted with the terms long and short. They are used by many binary options traders and are even more common in regular trading. This article will help you understand these critical terms of trading.

In general, long describes any sort of investment where the investor profits from rising prices of the underlying asset. A High option, for example, is a long investment: The investor profits when the underlying asset’s price is above the current price once the option expires. In regular trading, a long position would involve a trader buying an asset, thereby creating demand and contributing to rising prices.

Short, on the other hand, describes any sort of investment where the investor profits from falling prices of the underlying asset. A Low option, for example, is a short investment: The investor profits when the underlying asset’s price is below the current price once the option expires. In regular trading, a short position involves short selling an asset, thereby creating additional demand and contributing to falling prices.