What does it mean to be ‘long’ or ‘short’ a currency?

What does it mean to be ‘long’ or ‘short’ a currency?

  • 31 July, 2016
  • 4:53 pm EEST

Being long means buying a currency against another currency. Being short means selling a currency against another. If a trader goes long EUR/USD, he or she buys Euros and sells US dollars. Buying a currency is closely associated with taking a long position in that currency. A trader decides to be in a long position in a currency if he or she forecasts that the currency will appreciate in value against another currency. If a trader goes short EUR/USD, he or she sells Euros and buys US dollars. Selling currency is synonymous with shorting that currency. A trader would go short a currency if he or she nurtures the belief that it will depreciate in value against another currency.

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