Long vs Short: Profit from rising or falling prices?

Entering the world of crypto trading, you will continuously hear two terms: longs and shorts. They are not strange terms, but rather the two most basic ways to profit in the market.

What is a Position? Quick Understanding

Simply put, Position ( indicates the status of owning a certain type of token. Everyone has a position when trading—either you are holding it )Long(, or you are shorting it )Short(.

longs = Bet that the price will go up

You buy BTC with the expectation that it will increase from ) to $50k, then sell at a loss profit. When everyone goes long at the same time, the huge buying volume will push the price up very quickly—that's why during a bullish market, prices usually rise rapidly.

Formula: Buy EUR/USD = Buy EUR, sell USD

Short = Bet that the price will go down

You short ETH, predicting it will drop from $2,500 to $2,000. At that point, you use margin to execute the sell order, then take profit when the price actually drops. When too many people are shorting, the strong selling pressure will cause the price to plummet.

Formula: Sell EUR/USD = Sell EUR, buy USD

Investor psychology determines the market

When investors have the same mindset of $40k all longs or all shorts (, the market will move extremely strongly in a short period. A series of orders in the same direction at the same time = extreme price volatility.

This is also the reason why Stop Loss is very important—otherwise, you will be liquidated on your margin loan when the market moves against you.

Remember: Open trades = not closed profit/loss

All profits and losses on the screen are just “paper profits/losses” until you close the position. Therefore, managing your position and knowing when to take profits is a vital skill.

In summary: Go long to profit from price increases, shorts to profit from price decreases. However, everyone loses if predictions are wrong and there is no plan.