Question 1

What does it mean to go long?

Accepted Answer

Going long means you own a position that gains value if the price rises and loses value if the price falls. You usually open it by buying and close it by selling.

Question 2

What does it mean to go short?

Accepted Answer

Going short means you have a position that gains value if the price falls. A trader typically goes short by selling a borrowed asset, then plans to buy it back later at a lower price to return it.

Question 3

Why is shorting riskier than going long?

Accepted Answer

When you are long a stock, the most you can lose is what you paid, because the price can only fall to zero. A short loses money as the price rises, and a price can keep rising with no fixed ceiling, so the loss on a short is not capped the same way.