The long position is the most fundamental and widely used trading strategy in financial and crypto markets. It is based on the assumption that the price of an asset will rise over the short or long term. Both investors and traders use long positions to profit from price increases.
A long position means buying an asset with the expectation of selling it later at a higher price. Profit is generated through rising prices.
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What is a long position?
In a long position, a market participant buys an asset – such as a stock, an ETF, or a cryptocurrency – and holds it with the expectation that its price will increase. If the investor later sells the asset at a higher price, a profit is realized. If the price falls, a loss occurs. In traditional spot trading, the maximum loss is limited to the capital invested. In derivatives trading, this risk can increase due to leverage.
In the crypto market, long positions can be opened both without leverage in the spot market and via derivatives such as futures or perpetuals. With leveraged long positions, the trader posts collateral (margin) to trade with a larger position size. This increases both potential gains and potential losses. Many long-term investors follow a long strategy by holding cryptocurrencies over extended periods and reacting less to short-term price fluctuations.
Reasons for long positions
Long positions are often used to benefit from growth, technological development, or rising demand. In bull markets, long positions tend to dominate, as overall market sentiment is positive. Fundamental factors such as adoption, network growth, or macroeconomic developments also play a role.
The primary risk of a long position is a declining price. In spot trading, the maximum loss is limited to the invested capital, while leveraged long positions can face liquidation. Effective risk management – such as using stop-loss orders or appropriate position sizing – is essential. A long position benefits from rising prices, while a short position is designed to profit from falling prices. Both strategies complement each other and are used depending on market conditions.
