Course: Foundations·Lesson 2 of 2·8 min read·Last reviewed 12 May 2026
Understanding positions
Long and short are directions, not moods. Here is how exposure actually works.
Trader Faculty Team
Master Trading Mentor
By the end of this lesson you'll be able to:
- Define long and short positions in plain language
- Explain how P&L changes when price moves
- Recognize when you have zero exposure vs open risk
Long vs short
A long position means you benefit when price rises. A short position means you benefit when price falls. Every open trade is one of these — there is no third option.
Position
Your exposure to an asset — long if you benefit from price rises, short if you benefit from falls.
Beginners often say they are "in the market" when they have no open positions. Cash is a position too: zero directional exposure, which is often the right choice while learning.
Quiz — Test your understanding
1. If you are long EUR/USD, you profit when:
2. A short position profits when:
3. Cash with no open trades means: