Long vs short: betting on prices going up or down

Going long

Going long is simply buying an asset with the expectation that its price will rise, then selling later at a higher price. It is the default, intuitive direction — spot trading, in the ordinary sense, is always going long. The maximum loss on a long spot position is capped at the amount invested, since the asset price cannot fall below zero.

Going short

Going short means benefiting when price falls. Mechanically, on margin or derivatives venues, this typically involves borrowing the asset, selling it at the current price, and buying it back later to return what was borrowed — pocketing the difference if price fell in between. On a perpetual futures venue, going short is usually just a position parameter rather than an actual borrow, but the payoff shape is the same: profit if price falls, loss if it rises. Unlike a long position, a short position's potential loss is theoretically unbounded, because there is no ceiling on how high a price can rise.

Illustrative payoff slider

Drag the slider to see how a hypothetical long and a hypothetical short position would move, in plain percentage terms, if the price ended up somewhere other than the entry price.

What GaurdWallet supports today

GaurdWallet's trading terminal supports spot trading only — long positions, bought and held directly, with no borrowing and no short side. Derivatives and shorting are not part of this release. Nothing on this page should be read as a description of a product feature that exists yet; it is groundwork for understanding the concepts before they become relevant.

Risks on both sides

Long positions can still lose the entire amount invested if the asset goes to zero. Short positions, where offered elsewhere, add borrowing costs, margin requirements and an unbounded loss profile that spot trading does not have. Neither direction is inherently safer — each carries a different shape of risk, and neither is a guaranteed way to make money.