I just realized that many newcomers to the market do not fully understand what a long order is and how a short order works. Today, I want to share my experience after several years of trading.

At its most basic, what is a long order? It is when you open a buy position, predicting that the asset's price will rise. You buy at a low price and hope to sell at a higher price to profit from the difference. Conversely, a short order is when you open a sell position, expecting the price to fall. You borrow the asset from the exchange to sell at the current high price, then buy it back at a lower price in the future to return it and keep the profit.

But this is where most new traders often get confused. The real power of long and short orders lies in leverage (margin). When opening a position, you don't need to have 100% of the capital. For example, if you have $1,000 and use 1:10 leverage, you can open a position worth $10,000. If the price moves in your favor by 10%, you make a profit of $1,000 (doubling your account). But if the price moves against you by 10%, you lose all your initial margin.

That's why I always warn you about two major risks. First is margin call and liquidation. When losses exceed the maintenance margin, the exchange will send a warning. If you don't deposit more funds, the system will automatically close your position. Your account will be wiped to zero.

Second, I especially warn about short squeeze — the nightmare for those who short. While a long position can only lose up to 100% (if the price drops to zero), a short position has unlimited loss risk because the price can rise infinitely. A short squeeze occurs when an asset suddenly surges in price, forcing short sellers to buy back en masse to cut losses. This buying pressure pushes the price even higher. The 2021 GameStop event is a classic example — it wiped out billions of dollars from hedge funds.

When do I usually use a long order? When the market has positive news, good macroeconomic conditions (low inflation, high GDP, increasing employment). I also use technical indicators like MACD, RSI, Ichimoku to confirm an uptrend. Similarly, I use a short order when the market is negative or in a downtrend.

I have a strategy I like to call hedging — risk management. Suppose you hold 1,000 shares of Apple long-term and believe in the company, but in the short term, the market is panicking. Instead of selling everything, you can open a short position on the S&P 500 or even Apple itself. The profit from the short position can offset the decline in your core holdings.

Quick comparison between these two orders: A long order helps you profit when prices go up and allows you to own the asset (receive dividends if it's stocks). But you will lose when prices fall. A short order profits when prices decline, especially during prolonged downtrends. However, you lose when prices rise, and the risk can be unlimited.

A common question is whether to use long and short orders simultaneously. I recommend not doing so on the same product at the same time — it only costs you trading fees without generating profit. But you can use both on different markets. For example, when USD is strong, you short EUR/USD but go long USD/JPY.

Another point I want to emphasize is that crypto trading with long/short orders differs from stocks. The crypto market operates 24/7 with extremely high volatility and leverage (up to 1:100). The risk of liquidation happens faster and more violently. When holding positions overnight, you will pay overnight fees (swap/funding rate) — these fees can erode your profits if you trade long-term.

In summary, understanding what a long order is, how it works, and managing risks are key to surviving in the market. Never forget that leverage is a double-edged sword — it can double your account but also wipe it out. Always set stop-losses, manage your capital carefully, and never trade with money you can't afford to lose.