How many people start in crypto without fully understanding what long and short orders are, then open positions and immediately incur losses? I see this question come up quite often in trading groups. So today, I want to explore these two basic concepts in more detail.

First, you need to understand what a Position is. Simply put, it’s your buy or sell stance in the market—that is, which currency you hold and for what purpose. When entering crypto trading, you will encounter two main types of positions: long and short.

What exactly are long and short orders? Long is when you buy a cryptocurrency pair expecting the price to rise. You invest money to buy, then wait for the price to go up so you can sell at a higher price and make a profit. Most new traders start with this stance because the logic is quite simple—buy low, sell high.

But you don’t always get to buy at a good price. Therefore, investors often split their funds to buy at different price levels. When the price actually increases, you close each long position and realize profits. For example, buying EUR/USD means buying EUR and selling USD at the same time.

Conversely, short is when you sell a currency pair with the expectation that its price will fall. The tricky part here is that you don’t necessarily need to own the currency; instead, you use leverage and margin accounts to perform short selling. When the price drops, you close the short position and also make a profit. Selling EUR/USD means selling EUR and buying USD.

What’s interesting is how investor psychology affects long and short orders as market conditions change. If everyone shares the same view—for example, all expect the price to rise—they will all open long positions. At that point, the huge buying volume can cause the price to spike rapidly in a very short time. Conversely, if sentiment turns negative and everyone opens short positions to sell, the price can plummet uncontrollably.

Long and short positions are closely related to bullish and bearish speculation activities. The important thing is to understand this mechanism clearly and always set stop-loss orders in each trade to avoid unnecessary losses.

Every time you buy or sell, you are opening a trade. The trade only ends when you sell (close the position). Until then, your profit or loss is only on paper—not realized yet. All buy and sell values are converted and calculated to offset gains and losses based on the currency in your account.

Understanding what long and short orders are is the first step to prevent losing money unnecessarily. If you’re new to crypto, take the time to master these two concepts before starting real trading.