What long and short mean in trading

A long position gains when the price rises and loses when the price falls. A short position gains when the price falls and loses when the price rises. Long and short are the two directions a position can face.

What the words mean for a stock

On Investor.gov, a long position in a security means that you own it, with the expectation that the price will rise. A short position is generally the sale of a stock you do not own. The long and short page says the short seller borrows the stock, sells it, and later buys it back to return it. If the price fell, the buyback costs less than the sale. If the price rose, the buyback costs more.

That borrow-and-return step is the stock version of a short. A perpetual futures short is a different contract: you take the short side of the contract, and you do not borrow the coin in that stock-loan sense. The price result is the part that matches. The short still gains when the price falls and loses when the price rises.

The same price drop, two results

Start from a price of 100 and end at a price of 90. The price fell by 10. These figures are a worked example, not a recorded run.

One unit held long was bought at 100 and is worth 90. The unit result is a loss of 10.

One unit held short was sold at 100 and can be bought back at 90. The unit result is a gain of 10.

The end price is 90 in both cases. The direction decides the sign of the 10.

Reverse the move and the signs reverse. A rise from 100 to 110 is a gain of 10 for the long and a loss of 10 for the short.

What Tradee will open

A strategy expresses the direction with an action. An enter-long action opens the long. An enter-short action opens the short. A saved strategy can contain one of those actions, or both, and it can contain neither. With neither, the rule can be saved and still be unable to open a position.

The venue can refuse the short. Tradee treats a single-holding spot market as long-only, because that book cannot hold a negative amount. Short entries are blocked there before any order would be involved. A futures book that can hold the short side can take the short. Tradee still does not send that entry to an exchange. It records a modeled position. Strategy, bot, and execution separates the saved rule from the run that applies it.

Costs still apply in both directions. A gain of 10 before fees can be smaller after fees, and a small gain can disappear. Why win rate is not enough is the page for reading the result after the direction is chosen.