A long position is when someone takes a position in crypto or stocks with the expectation that the price will increase. Going long is one of the main strategies investors use when trading, as it involves purchasing an asset and expecting it to increase over time. We’re going to define what a long position is, what “go long” means, and provide some examples.
- Opening a long is when traders buy an asset low and sell it higher
- Longing is the opposite of shorting an asset or a cryptocurrency
- “Long,” “longing,” and “going long” all mean buying an asset with the expectation its price will increase.
What is a long position
When a trader adds an asset or token to their portfolio, anticipating it will increase in price over time, it means they took a long position—in options or futures, going long means betting on the fact that the price of an asset will increase over time. Traders will generate profit when the asset is sold. Until then, the gains someone sees remain unrealized until the position is sold or closed. From experience, the potential of a long position is unlimited if the trade remains open, but it carries risks of additional costs (fees).
Longing is the opposite of short selling, where traders anticipate the price to decline. The choice between the two depends on what the trader anticipates, as long and short positions are executed differently.
Does going long mean buy or sell?
Going long means buying assets or taking a position in a stock or crypto which then benefits when the price of the set asset increases. When a long position is opened, the person buys the asset or the contract and sells it to close.
The sequence to remember is always:
- Buy to open: Traders purchase the asset because they expect its price to increase
- Holding the long: The trade creates unrealized gains or losses as price action moves.
- Sell to close: The asset is sold, and traders either are in profit or at a loss.
Opening a position of 100 shares at €20 per share means they are opening a €2,000 long position. When prices reach €25 per share and are sold, you are closing the position and netting a gross profit of €500 – before taxes and fees are calculated.
If the position is sold when the price of the stock dips, then you are netting a loss.
The confusion many people have is when experts use “selling,” which creates confusion. Selling a long position isn’t the same as opening a short position.
When you sell an asset or contract, you reduce or close your exposure to the market and end up holding cash. If they have a position that benefits from the asset’s price declining, usually by borrowing and selling the asset or a futures contract, then they are holding a short position.
How long positions work
Buying an asset at a lower price and selling it at a higher price is the basic principle of longing. Investors purchase a token at a set price and hold it until they reach their specific target and sell it. When someone longs, they can achieve this through spot buying or by using futures markets to buy contracts where they expect the token or asset to increase in price over time.
The process of longing involves researching assets, stocks, or tokens, purchasing them through a broker or market maker, monitoring their performance, and closing the position once the profit target is achieved.
How to open and close a long position
Opening and closing a long position means taking the risk with the assumption that the price will increase and eventually ending the exposure and realizing a profit or a loss. The way it works depends on whether the trader buys the underlying asset or uses futures contracts with set values.
Longing in spot markets versus futures is different because in spot a trader buys the stock or crypto with the amount they have,e using limit or market orders. A futures contract provides long exposure without giving the trader ownership of the underlying asset.
The process is similar to spot markets, but futures introduce new considerations, including leverage, maintenance margin, and liquidation risk.
When closing a spot position, the position is closed by selling the asset. If only part of the holding is sold, the position is reduced rather than fully closed. A position in futures markets is closed by submitting a closing order for the same contract, and exchanges may label them as “close long,” “sell to close,” or simply “close position.”
Difference between long and short positions
Long and short positions are opposing strategies. Longing involves buying assets with the expectation that their prices will increase, while shorting involves opening a position with the expectation that their prices will decrease. Shorting can’t be done on the spot; it requires borrowing and selling assets a trader doesn’t own, then purchasing them at a lower price.
| Feature | Long position | Short position |
| Market expectation | Asset’s price will increase | Asset’s price will decrease |
| Opening action | Buy the asset or open a bullish contract | Borrow and sell the asset, or open a bearish contract |
| Closing action | Sell or close the long contract | Repurchase or close the short contract |
| Underlying ownership | Owned in stock or spot crypto trades | Usually not owned when the position is opened |
| How profit is generated | Sell or close at a higher price than the entry price | Repurchase or close at a lower price than the entry price |
| Maximum profit | Theoretically unlimited because the price can continue rising | Limited because the asset’s price cannot fall below zero |
| Typical use | Investing, bullish speculation and long-term asset ownership | Bearish speculation, hedging and reducing portfolio exposure |
While shorting often refers to using futures markets, it can also mean exiting a position, waiting for the asset’s price to drop, and then repurchasing it.
Is a long position bullish or bearish
Opening a long position is part of a bullish trading strategy since traders hope for the price to increase, having a positive outlook on the market. The optimistic outlook drives the decision to purchase and hold the asset, with the expectation of its appreciation.
When market analysts describe sentiment as “long” on a particular asset, they’re indicating confidence in its upward price trajectory.
What is a long position in stock markets
In equity markets, long positions are the most common investment approach and traders either use leveraged or unleveraged positions.
Leveraged long positions involve borrowing money to purchase additional securities beyond what your cash allows. This approach amplifies both potential gains and losses through margin trading.
An unleveraged long position relies solely on your available cash or equity without borrowing and means buying on the spot market. This conservative approach limits both risk and return potential but provides greater stability.
Most buy-and-hold investors prefer unleveraged positions for long-term wealth building, as they avoid margin interest costs and reduce the risk of forced liquidation during market downturns.
How long positions differ in stocks, crypto, futures and options
Going long does not always mean purchasing and owning the underlying asset. Ownership, expiration, leverage, costs, and potential losses depend on the financial product being used.
| Market or product | What traders hold | Expiration | Maximum loss |
| Stocks | Shares in a company | None | Initial margin in an unleveraged position |
| Spot crypto | Cryptocurrencies | None | Initial margin in an unleveraged position |
| Futures | Contract linked to an asset price | None | Varies on leverage and magin |
| Call options | The right to buy an asset at a set price | Yes | Premium paid by the option buyer |
What is an example of a long position?
If an investor purchases €90,000 worth of Bitcoin at €45,000 per Bitcoin and the price increases to €55,000, the position then has a value of €110,000. As a result, buying at €45,000 and selling (only when selling) at €55,000 generates a net profit of €20,000.
What is the risk of a long position
The primary risk of a long position is a price decline rather than the anticipated increase. In such scenarios, the maximum loss a trader can incur is limited to their initial investment, as an asset’s price cannot fall below zero.
Additional risks include:
- Suboptimal asset selection: Investing in an asset that underperforms or ties up capital unnecessarily.
- Market volatility: Prices may temporarily decrease before eventually rising, leading investors to sell early due to emotional attachment.
Successful long-term investors mitigate these risks by developing and adhering to strict exit strategies and predetermined risk management rules.
Managing the long position strategy
Understanding how long positions work is necessary if someone wants to invest and even trade the market, regardless of how they want to utilize it. It allows them to better read and understand any news and outcomes from major announcements, but also know how markets work.
If you don’t want to take the risks of longing and short trading, Yieldfund, a quantitative trading company, trades the top 10 cryptocurrencies and offers annual returns of up to 48% on select plans. At Yieldfund, we prioritize transparency, and all open and closed long or short positions are visible on our performance page.
FAQ
Is a long position a sell?
A long position isn’t a sell, as investors are buying an asset rather than selling it. Selling in a long position occurs when traders want to close their position.
What does going long mean in trading?
Going long in trading means purchasing an asset or financial instrument with the expectation that its value will rise. Traders go long when they have a positive outlook on an asset’s future performance.
What Is a long position in crypto?
A long position in cryptocurrency involves buying and holding digital assets with expectations of price appreciation. Crypto long positions follow similar principles to traditional markets, where investors profit from rising token values through strategic buying and selling.
