Short
a.k.a. Sell, Short position, Going short
Selling something because you expect its price to fall, aiming to buy it back cheaper later.
Going short means you sell first and buy back later. In forex that is completely normal: short GBP/USD means selling pounds for dollars, betting the pound weakens.
If the price drops, you buy back cheaper and pocket the difference. If it climbs, you lose. Shorting is just the mirror image of going long, and in forex it is equally easy to do either.
A short trade
- Sell GBP/USD at 1.2700 with a micro lot ($0.10 a pip).
- Buy back at 1.2650: that is +50 pips.
- 50 × $0.10 = $5 profit (before costs).
Bottom line: Had the pound risen to 1.2750 instead, you would be down $5.
Thinking shorting is exotic or only for pros. In forex every trade is long one currency and short the other.
Keep this word for good
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