When you start understanding crypto, you immediately encounter a bunch of specialized terms. Long, short, margin, liquidation — it sounds intimidating, but actually everything is logical. Let’s figure out what’s what here.

First, a little history. No one knows exactly where the terms long and short in trading originated, but the first serious mentions date back to the 1850s journals. The logic of the names is simple: if you expect the price to rise, you open a position for the long term (long — long), and if you expect it to fall, you do it quickly (short — short). That’s all.

What is a long in trading? Essentially, it’s a bet on growth. You buy an asset at the current price and wait for it to increase. For example, Bitcoin costs $30,000, you’re confident it will be $40,000 later — you buy and wait. The difference between the purchase and sale price is your profit. Simple and clear.

Short is the opposite. You borrow the asset from the exchange, immediately sell it at the current price, and then, when the price drops, buy it back and return it to the exchange. The profit is the difference between the sale and purchase price. It sounds more complicated, but in practice, the exchange does everything automatically, you just need to press a button.

In the crypto community, traders are divided into bulls and bears. Bulls believe the market is growing, open longs and buy. Bears expect a decline, open shorts and sell. Hence the names of a bull market (when everything is rising) and a bear market (when everything is falling).

Hedging is a way to protect yourself from unexpected price movements. Suppose you opened a long on two bitcoins but aren’t sure the price will really go up. At the same time, you open a short on one bitcoin. If the price rises from 30 to 40 thousand, your profit will be 10 thousand instead of 20, but if the price drops from 30 to 25 thousand, the loss will be 5 thousand instead of 10. You pay less potential profit for insurance against losses.

For all this, futures are used — these are contracts that allow you to profit from price movements without owning the asset itself. In the crypto market, perpetual contracts (without an expiration date) and settlement contracts (you only get the difference in price, not the actual asset) are popular. For longs, buy futures are used; for shorts, sell futures.

There is one unpleasant thing — liquidation. If the price moves sharply in the wrong direction and the collateral isn’t enough, the exchange will automatically close your position. First, it will send a margin call, asking you to add more funds, but if you don’t do it, the trade will close itself. That’s why it’s important to monitor your margin and not open positions with excessive leverage.

The advantage of a long is that it’s simple and intuitive — you just buy the asset. Shorts are more logically complex, and prices usually fall faster and less predictably than they rise. Also, most traders use leverage to increase profits, but this also increases risks.

In the end: long and short are just ways to profit from the rise or fall of the price. You choose a position based on your forecast, open it through futures, and monitor your collateral level. The main thing to remember is that borrowed funds can bring higher profits but also come with greater risks.