If you are a beginner trader, you might be confused by the terms Long and Short in the financial markets. I will explain clearly what these two orders are and how we use them in trading.

In short, a Long Position means placing a buy order, with the trader expecting the price to rise. The goal is to buy low and sell high. An easy example is: if you buy shares of PEAR at 350 baht and the price rises to 400 baht, you sell and make a profit of 50 baht per share. This is opening a Long Position.

But if the situation doesn’t go as expected, for example, the price drops instead of rising, you will need to cut your losses, which is the risk of going Long.

Conversely, a Short Position involves selling an asset first, with the trader expecting the price to fall, and then buying it back at a lower price. This technique is called Short Selling. For example, you borrow ORANGE shares from a broker and sell them at 350 baht. When the price drops to 300 baht, you buy back and return the shares to the broker, making a profit of 50 baht per share.

What’s interesting is that Short cannot be used with all instruments. It is only available with derivatives like CFDs and some other types of instruments. If a trader wants to short regular stocks, they must go through a complicated process of borrowing shares.

I notice that understanding Long and Short clearly is very important for traders because it opens up the opportunity to profit whether the market goes up or down. You don’t have to wait only for a bullish market.

Currently, tools like CFDs make short trading much easier. The process is shorter, more convenient, and you can use leverage to amplify your profits. If you’re interested in starting, you might try practicing with a demo account first to get familiar with using long and short positions in real situations.

Most importantly, remember that both long and short carry risks. If the price moves in the opposite direction of your prediction, you could incur losses. So, managing risk properly is essential.