CryptoEducation: What Are Long and Short Positions?

25.03.2022

Let’s break down what “long” and “short” really mean — and no, we’re not talking about clothes. Where do these terms come from?Back in medieval Europe, wooden tally sticks were used to record debts. Notches were carved on a hazelwood stick to represent the amount owed. The stick was then split lengthwise, leaving part of the base intact — forming a handle. This produced two parts: the long piece with the handle (stock), and a short piece (foil). Both had identical notches and could be reunited to verify the debt. Due to the unique grain of the wood, forging was nearly impossible.From this system came the terms: "stock market", "long" and "short" positions. Modern usage of these terms began on commodity and stock exchanges in the 1850s in the U.S. Long ≠ forever, Short ≠ briefDespite their names, “long” doesn’t mean held for a long time, and “short” doesn’t mean quick.A short can last for weeks, and a long might only be held for minutes. These terms were adopted into the crypto world from traditional finance. What do they mean in trading?Long position — you believe the price will go up. You buy the asset to sell it later at a higher price. Short position — you expect the price to fall. You borrow the asset, sell it, and later buy it back cheaper. These strategies are common in margin trading, where leverage is used to amplify gains (and risks). Important!Due to the high volatility of crypto markets, traders often use longs and shorts to profit from price changes. However, when the market moves against your position, you can reduce losses through hedging — a strategy where you open an opposite position to offset risk.