Getting started in crypto, almost everyone will be overwhelmed by unfamiliar terms. I was the same until I understood what Long, Short, and Position mean, then everything started to make sense. Today, I want to share what I’ve learned so that newcomers to this field can grasp it more quickly.

First is Position, simply put, it is your trading stance in the market. When you hold a certain amount of cryptocurrency or a currency pair, that state is called a Position. There are two main types of Positions you need to know. The first is Long Position, meaning you bought in and expect the price to rise. The second is Short Position, meaning you sold short with the hope that the price will fall.

But what exactly is a long order that everyone mentions? It’s when you place a buy order for a cryptocurrency pair with the intention of selling it at a higher price. That’s all. When traders see signals that the price is about to increase, they will buy in. However, few dare to put all their money in at once. Instead, most investors split their funds, buying at different price levels. When the price actually goes up, they take profits gradually and earn gains. For example, if you buy EUR/USD, you are buying EUR and selling USD.

Conversely, Short is when you sell a currency pair short, expecting it to decrease in value. The interesting part is that you don’t need to own the currency beforehand; you can use a margin account to do this. When the price drops, you close the position to take profit and earn from the decline. Selling EUR/USD means you are selling EUR and buying USD.

What’s fascinating is investor psychology. When everyone shares the same view that the price will go up, they all rush into Long positions. At that point, the large volume of long orders causes the price to rise very quickly in a short period. Conversely, if the general feeling is that the price will fall, everyone will Short simultaneously, and the price will plummet uncontrollably. That’s why it’s crucial to understand what a Long order is and how to manage risks. Setting stop-loss orders for each trade is essential to avoid unnecessary losses.

Another important thing is that a trade is only considered finished when you close the order. Before closing, all profits and losses are just on paper; they are not truly yours yet. All values are converted and calculated based on the currency in your account. Understanding this mechanism will help you trade more intelligently.

I hope the above explanation helps you better understand Long, Short, and how they operate in the crypto market. If you want to practice, you can go to Gate to see different currency pairs and start learning from small trades.