What does going long or short mean in trading?Last Updated: September 26, 2019
When a trader enters a long position, he expects the underlying crypto asset (position token) price to appreciate. For example, if a trader goes long on ETH/USDC on Nuo, the platform borrows USDC from the reserve pool for the trader and converts it into ETH. Later, when the value of ETH goes up, the trader may sell it for more USDC than what was borrowed resulting in a profit.
A short position is essentially the opposite of a long position. When traders enter a short position, they expect the price of the underlying cryptocurrency to depreciate. To short a currency means to sell the underlying cryptocurrency in the hope that its price will go down in the future, allowing the trader to buy the same currency back at a later date but at a lower price. The difference between the higher selling price and the lower buying price is profit. To provide an example, if a trader shorts ETH/USDC, they are selling ETH to buy USDC.