When buying stocks, there are two main positions you can take: long and short.
They’re called positions because you are taking a specific stance in the market; you are choosing to either benefit from prices going up or from prices going down.
Long
A long position means you buy shares because you expect the price to rise and plan to sell later at a profit.
Example
- You buy 10 shares at $50 each (go long).
- The price rises to $60.
- You sell and make $10 per share profit.
So “going long” = a normal buy trade.
It’s the opposite of shorting, where you profit if the price falls.
Short
A short position means you borrow shares and sell them right away because you expect the price to drop, then buy them back later at a lower price to return them.
Here’s how it works
You borrow shares from your broker and sell them at the current price.
Later, you buy them back (called “covering”) at a lower price.
You return the shares to the broker and keep the difference as profit.
Example
You short 10 shares at $100 → you get $1,000.
The stock drops to $80.
You buy them back for $800.
You return the shares and keep $200 profit.
If the stock price rises instead, you lose money — and losses can be unlimited, since prices can rise indefinitely.