Long Position: You buy an asset (e.g., stock) because you expect its price to rise. Your goal: buy low, sell high. If the price rises, you make a profit. The risk of loss is limited – you can only lose your investment if the price falls to zero.
Short Position: You sell an asset that you usually borrowed from your broker because you expect its price to fall. You hope to buy it back later at a lower price. If the price drops, you make a profit. The risk of loss here is theoretically unlimited, as the price could also rise significantly. Shorting is therefore riskier than going long.
In summary:
• Long = betting on rising prices: buy and sell later (at a higher price).
• Short = betting on falling prices: sell first (borrow) and buy back later (at a lower price).