Long and short positions in trading
IQ Option is the best company for trading. This company's IT-specialists have made its platform from scratch. Gradually, they built a very popular and profit making platform giving traders an opportunity to earn much money.
The platform's success and popularity inspires other traders and dealing services. This company gives its clients the best trading conditions, reliable support, modern and unique website platform, and also mobile phones and computers' app. This broker's favorable conditions ($10 lowest first deposit, free demo account, $1minimum rate) give every person a chance to take part in trading. The company provides identical opportunities for both online and app's users. So, the platform let everyone to profit in any place: in park, café, at home etc.
This company's trading platform has a following important nuances – built in the platform tools of technical analysis of assets including indicators which are eight (Moving averages, Alligator, Bollinger bands, MACD, Relative strength index RSI, Parabolic SAR, Awesome Oscillator, Stochastic Oscillator), and also tools of graphical analysis (Jog, Half line, Horizontal line, Fibonacci lines). Moreover, alert and trading signals service is built in the platform. These signals anticipate traders about trend changes and other important for it events. All tools may be adjusted and edited depending on your own tastes.
Regular tournaments, traders competitions taking place almost every week are also refer to the broker's peculiarities. Moreover, prize fund is a rather large very often.
Now, let’s consider long and short positions that is used in the company's trading process. They are one of the basic terms in trading. When trading CFDs you basically have two strategies: either to buy assets or sell them. If you anticipate that the profit of an asset will go up, you buy the asset at the current price and sell it later at a higher price. Such positions are called long. Let’s take an example. Jack thinks that the share of the First Company that now cost $10 will rise in value. So, he decides to buy them investing $1000. In this case Jack paid for owning 100 shares of the First Company or, in other words, Jack is long 100 shares. After some time the price of the shares rises and becomes $12. Jack sells shares and makes a profit of $200.
But are only long positions available for traders who don’t own any assets? No, there is another trading strategy. Selling an asset without actually owning it. It is known as short selling. Let’s have a look at the next example. Helen anticipates that the shares of the Second Company that now cost $10 will decrease in value. She decides to go short and invest $1000 in selling the shares. In order to do this, Helen has to borrow 100 shares from her broker. After doing this, she immediately sales the shares at the current price. When a share price is dropped at $9, Helen repurchases the shares at the lower price, returns them to the broker and gets the profit of $100.
So, generally speaking, in short selling a trader borrows asset from a broker in order to resell them at a lower price and make a profit on the occurred difference.
Enjoy your trading.