We know Forex market is the largest and most liquid financial market in the world. For Forex traders, the main purpose for trading Forex is to make profit from their positions. I would like to ask you about a basic Forex term: Do you know what a Forex position for Forex trading is?
By definition, a Forex position can express trading view through the pattern of buying or selling for Forex trading. It also can be defined as the netted total holdings of a given currency.
A Forex position can be categorized into the following 4 types:
Flat position means there is has no exposure in the market.
Short position is the Forex position where more currency is sold than being bought. Short sellers assume that they will be able to buy the currencies at a lower amount than the price at which they sold short.
Long position is the Forex position where more currency is bought than being sold. Long buyers assume that they will be able to sell the currencies at a higher amount than the price at which they buy long.
Open position is the Forex position where an investor has either bought or sold a currency but is yet to sell or buy back the corresponding amount to successfully close the position.
“Going Long” and “Going Short”
Forex terms such as “Going Long” and “Going Short” are also frequently used. A Forex investor can basically enter the market by buying (long) and selling (short). The Forex term “Going Long” is used when you are buying a currency, which is called “long” in that currency. Similarly, when you are selling a currency, you are said to be “Going Short” in that currency. Since it doesn’t require you to sell currencies by owning them on Forextrading, it is possible for investors to make profit regardless if the trend is going up or going down.
Open position and “Going flat”
When you enter the market and the Forex trading is active, then you are in an open position. In order to finish the buying and selling cycle, you need to close your position, which is also known as going flat. If you did a short selling, you need to buy to go flat, and likewise, if you are long, you need to sell to close position.
If you hold your open position for more than one week, it is considered to be long term trading. Some Forex trades only takes a few minutes from open to flat position, i.e. Forex scalping Long term Forex trading is suitable for these Forex traders that don’t have time to follow Forex market movements everyday and those beginners that need time to study Forex knowledge.