In trading, going “long” refers to buying a financial instrument like a stock, bond, or commodity with the expectation that the price will rise in the future. It’s the most traditional and well-known trading method – you buy low and aim to sell high. When you take a long position, you’re essentially betting on the positive performance of an asset.
For example, if you think that the shares of a certain company will rise, you can take a long position by buying the shares now. Then, if the share price does indeed rise, you can sell the shares at the higher price and profit from the difference.
The term “long” also applies to derivative products such as options and futures. For instance, buying a call option is also considered a long position because it gives you the right (but not the obligation) to buy an asset at a specific price within a specific period of time, anticipating a rise in the market price of the asset.
Remember, while going long offers potentially unlimited profits (since there is no upper limit to how much an asset’s price can rise), it also involves the risk of losses if the price of the asset falls instead of rises. The worst case scenario would be losing the entire investment if the asset’s price drops to zero.