Getting into crypto, I’ve realized there are two concepts that everyone must understand clearly if they want to trade effectively: long and short. At first, I was also pretty confused by these terms, but after learning them in depth, I found they’re not as complicated as they sound.

A position is essentially how a trader’s holding relates to a specific currency pair. It depends on your mindset and your prediction of the market. There are two main positions you need to know: a long position and a short position.

Long—also called buying—is when you buy a cryptocurrency pair with the expectation that the price will rise in the future. When you go long, you’re betting that the market will move upward. I usually don’t put all my money into one trade; instead, I split it and buy at multiple price levels. That way, when the price actually increases, I close the long orders and make a profit. For example: buying EUR/USD means you buy EUR and sell USD.

On the other hand, short is when you short-sell a currency pair with the prediction that the price will fall. What’s interesting is that when you short, you don’t need to actually own the currency pair—you use a leveraged account and margin to execute the trade. When the price really drops, you close the short orders and pocket the profit. For example: selling EUR/USD means you sell EUR and buy USD.

The great thing is that long and short are closely tied to investor psychology. If most traders open long positions at the same time—that is, they all believe the price will go up—then they’ll rush to buy. When there are too many longs at once, the price can surge in a very short time. Conversely, when everyone shorts, they’ll short-sell in large numbers, causing the price to tumble uncontrollably.

This is exactly when you need to be most careful. Long and short are both closely linked to speculating on price increases and price decreases. That’s why I always set stop loss for each order to avoid unnecessary losses. Remember, as long as you haven’t closed the trade, all profits and losses are only “on paper.” Once you close the trade, all amounts are converted and the profit and loss are calculated and netted out.

So now you understand long and short more clearly. These two concepts are the foundation of crypto trading, so don’t overlook them. If you’re just starting out, study this theory carefully before placing any real orders!