Long Position
You own the asset and profit when its price rises.
What is Long Position?
Buying and holding a security outright. You have paid for it, you own it, and your gain or loss tracks the price directly. Maximum loss is what you paid (the price can only fall to zero); maximum gain is theoretically unlimited.
Long Position: a worked example
Buy 100 shares at $50 ($5,000 out the door). At $70 you are up $2,000. If the company goes bankrupt, you lose the full $5,000 and no more.
What is the difference between Long Position and Short Position (Short Selling)?
Long = own it, bet on up, loss capped at cost. Short = borrowed it, bet on down, loss uncapped.
Often confused with Short Position (Short Selling) - see Long Position vs Short Position (Short Selling) side by side.
More terms in Positions & Trade Mechanics
Short Position (Short Selling)
You borrow shares, sell them, and profit if the price falls.
Margin
Borrowing from your broker to buy securities, using the account as collateral.
Cash Account
An account where every purchase is paid for in full, no borrowing.
Leverage
Using borrowed money to increase exposure relative to your own capital.
Initial Margin (Reg T)
The equity you must put up to open a margin position - generally 50%.
Maintenance Margin
The minimum equity percentage you must keep in a margin account.
Margin Call
A demand to add cash or securities after equity falls below maintenance.
Short Squeeze
Rising prices force short sellers to buy back, pushing prices higher still.