What is Going Short?

Going Short Definition. Going Short is a term used to describe the type of trading position taken by a Seller with the sale of a stock, commodity, or currency for investment or speculation. The Buyer in the transaction is regarded as having gone “long”. With foreign currencies, a pair of currencies is always involved in the trade such that one party is always going long while the other party goes short. In forex trading, a trader usually goes “short” in a currency because he has an expectation that the exchange rate will move in his favor by decreasing and that he will profit from that price behavior. It the most intuitive and optimistic way a trade can be profitable. Although it is not necessarily always the case in forex trading, going short may also imply that the Seller of the financial instrument intends to hold an option or short position, by borrowing from his broker, for a long period of time, thus waiting for depreciation to deliver a profitable opportunity to cancel his position.

Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.