New to the crypto world, you will encounter two main concepts: trading and holding. But if you start trading, you will definitely hear frequently about Long and Short — these are two terms that everyone must understand if they want to make money from this market.

First, you need to understand the concept of position. Simply put, a position is the state of holding a certain amount of cryptocurrency under specific market conditions. There are two main types of positions: long (buy) and short (sell). This determines your entire profit strategy.

With a long position, you buy a cryptocurrency pair expecting the price to rise, and you will sell it at a higher price. When you believe the price is about to increase, you buy in. However, you don’t always get a good entry price, so most traders split their funds to buy at different levels. When the price actually goes up, you take profit and earn gains. The way long and short work in this case is quite simple — you profit from price increases.

Conversely, a short position is when you short-sell a cryptocurrency, predicting it will decrease in value. You don’t need to own the pair, but use leverage and margin to execute the short sell. When the price drops, you close your short positions and profit from the decline. Understanding what long and short mean in both directions will help you be more flexible in trading.

What’s interesting is that investor psychology has a huge impact. If everyone shares the opinion that the price will rise and opens long positions, they will all rush to buy. At that point, too many long orders will cause the price to increase rapidly in a short period. Similarly, if everyone shorts, the price will plummet uncontrollably. That’s why the cryptocurrency market is so volatile.

One very important thing: when opening a position (buy or sell), you need to clearly understand what you are doing. All profits and losses are only on paper until you close the position. Therefore, always set a stop loss to avoid unnecessary losses. Understanding what long and short are must be combined with risk management — that’s the first lesson for anyone who wants to survive long-term in the crypto market.