Long and short
Buying is called going long, selling is going short. In forex, selling is not unusual or advanced — every pair is a ratio, so selling EUR/USD is simply buying dollars with euros. There is no borrowing to arrange and no extra permission needed.
How the profit works
Long, you profit when the price rises. Short, you profit when it falls. The arithmetic is symmetrical: the distance moved multiplied by the pip value multiplied by the size, with the sign flipped.
Where the stop goes
Below the entry on a buy, above it on a sell. This sounds obvious and is one of the most common ordering mistakes, particularly on a platform where the stop field does not care which direction you chose.
The spread applies either way
You buy at the ask and sell at the bid. A short position is opened at the bid and closed at the ask, so it pays the same spread as a long, just at the other end.
In short
| Buy / long | Profits when the price rises |
|---|---|
| Sell / short | Profits when the price falls |
| Buy stop | Below the entry |
| Sell stop | Above the entry |
Common questions
Do I need to own a currency to sell it?
No. You are entering a contract with the broker rather than delivering currency, so short is as simple as long. This is different from shorting a share, where stock has to be borrowed.
Is shorting riskier than buying?
In forex, no — the pair can move in either direction by similar amounts. The asymmetry people remember from stocks, where a share can rise without limit, does not apply the same way to a currency ratio.
Can I hold a buy and a sell on the same pair?
Some platforms allow it, called hedging. The two positions cancel out in profit and loss while both pay spread and swap, so it is usually a more expensive way of holding nothing.
Trading forex and CFDs on margin carries a high level of risk. Most retail accounts lose money. Nothing on this page is financial advice or a recommendation to trade.