Going Long

In finance when you open a long position or equivalently go long in a security, this means you buy and own the security and will profit if the price of the security goes up. Once the shares are up you sell them and pocket the profit. Going long is the more conventional practice of investing and is contrasted with going short.

We only trade in shares and not in options and other derivatives so when we go long we open a new position and buy shares.

Open LONG position

To go LONG with your online broker you should:

Click on the Share you want and choose: New Order

Action: BUY or OPEN - BUY (depends on your broker)

Order type: PRICE LIMIT - never choose Market unless you really know what you are doing

Enter the price per share you want to pay and a time-limit for the order (today)

Before you actually send it to the Stock Exchange your broker will verify whether you have sufficient funds, if the stock value is within a regular range of the current market price and finally provide you with a total overview of your order and the related costs.

Example:
Shares Company X trade at 100 USD
You believe they are undervalued and expect the price to go up.
You go LONG and buy 100 shares @ 100 USD
Therefore you will pay 100 x 100 = 1,000 USD
If the price goes to 120 USD you sell the 100 shares @ 120 USD and you earn 200 USD
Equivalently you loose 200 USD if the shares go down to 80 USD

Close LONG position

To close a long position and sell the shares you own you should:

Click on the shares you want to sell and choose: New Order

Action: SELL or CLOSE - SELL (depends on your broker)

Order type: PRICE LIMIT - never choose Market unless you really know what you are doing

Enter the price per share you want to receive and a time-limit for the order (e.g. today)

single Please note that orders are not always completed in one transaction. Imagine you want to buy 100 shares from Company X for 1 USD. On offer are 100 shares for 1.02 USD and 25 for 1 USD. Your broker will buy these 25 shares and once some one else is elling for 1 USD your broker will buy the rest.

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