What does long mean in forex I wonder?
Haha loved the graphic.In forex trading, going long on a certain currency pair means buying that pair. For example, if you say you are going long on USDJPY, this means you are buying the USDJPY (or buying the USD against the Japanese Yen). Going long means the same as being in a bullish position. Both mean that you are buying the instrument.
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In the same sense, going short on a certain currency pair or asset means selling that asset. However, this is not a straightforward sale, since you usually do not hold that asset to begin with. To enable you to sell it, your broker offers you a short-selling service, according to which the broker agrees to buy the asset and sell it for you, on the condition you will buy it at a later date. In other words, you borrow those assets from the broker. This is the case with stocks. However, in currency pairs, the broker does not need to follow this process because currencies are traded in pairs. For example, when you sell the EURUSD, you are in fact selling the Euro and buying the dollar.
Also, traders often use the term long position to refer to a bullish trade. Traders use the word position since it expresses where they stand when it comes to the specific market in which they are trading. That is, a position represents an opinion or a bias regarding future market direction. Thus, here, entering a long position shows the position of the trader when it comes to the market, which may be a losing or a winning position, depending on many factors.
Thinking in terms of positions, rather than trades, can help traders think more objectively about how to analyze and approach the market, as well as manage risk, and it can improve trading results. When reviewing your earlier positions, it would be wise to think about the justifications you had for opening this position and not the opposite direction. This can help you learn lessons for future trades.
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