"Short" and "Long" in Trading: Basics for Those Who Haven't Understood Yet

When I first started diving into the crypto world of trading, these mysterious words "long" and "short" gave me a headache. Everyone around was throwing them around like experienced traders, and I felt like a complete idiot. Today I want to explain in simple terms what they are, without all this arrogant terminology that is thrown at beginners.

Where did these words even come from?

To be honest, no one really knows for sure. They say that the first mentions were found in some magazine from 1852. But I find the version about the literal meaning amusing: "long" (long) — because waiting for the rise often takes a long time, and "short" (short) — because the fall usually happens quickly. And indeed, assets always seem to fall particularly swiftly, making us gnash our teeth.

What do these terms actually mean

Long is when you simply buy an asset and wait for it to rise. Just like ordinary people: bought lower, sold higher. For example, I buy bitcoin for 100 thousand rubles and wait for it to cost 150 thousand. The difference of 50 thousand is my profit.

Short is when you bet on a decline. Imagine borrowing your friend's new iPhone, immediately selling it to someone else, and when the price of iPhones drops (, for example, when a new model comes out), you buy the same one but cheaper and return it to your first friend. The difference is yours. Yes, it sounds like fraud, but on the trading platform, it's quite legal.

On the platforms, all this is done with the push of a button — they handle the entire scheme for us. Thank goodness, otherwise I would definitely be confused.

Bears vs Bulls

When I was called a "bear" in the traders' chat, I was initially offended. It turns out, it's not an insult! Bears are those who open shorts, expecting a market decline. Why bears? Because they kind of push the price down with their paw.

Bulls, on the contrary, are those who believe in the rise and open long positions. They seem to push prices up with their horns. When talking about a "bull" or "bear" market, they refer to the general trend — everything is rising or falling.

I often find myself being a bear — I've burned myself too many times on unfounded "pumps".

Hedging — or how to insure yourself

Sometimes I open a long position, but my inner voice says: "What if everything crashes?". Then I can open a short position simultaneously, but for a smaller amount. This is called hedging.

Suppose I believe that bitcoin will rise, and I open a long position on two bitcoins. But just in case, I open a short position on one. If bitcoin rises from $30,000 to $40,000 — I will earn on the difference from only one bitcoin ( instead of two ). But if it drops to $25,000, I will lose half as much.

Some think that they can open two identical positions in different directions and fully protect themselves. No! This is just a guaranteed way to lose money on commissions.

Futures and Liquidations

For shorts and longs, futures are most often used - these are contracts where you trade not the asset itself, but the obligation to buy or sell it.

And here I was often ambushed by trouble — liquidation. This is when the market sharply goes against your position, and the platform automatically closes the trade so that you don't owe them money. At that moment, you lose everything you invested in this position. The platform usually warns in advance (margin call), but when the market moves too quickly, you just can't react in time.

What is easier to use?

Longs are easier to understand — it's like a regular purchase. Shorts are more complicated and seem illogical. Moreover, declines often happen suddenly, making them harder to predict.

Many use borrowed money (leverage) to increase profits. But it's like playing with fire — you can get burned.

Personally, I first learned on longs, and only switched to shorts when I started to feel the market. But every time I bet on a decline, it feels like I'm doing something wrong. Such is trader superstition.