Profit from market growth (LONG positions)
LONG (Buy) position - is the process of buying an asset (opening a position) at a low price, with the intent to resell the asset (close a position) at a higher price when the price of the asset increases. Essentially, Long trading is buying low and selling high
Example of a LONG (Buy) position:
Let's assume 1 BTC = $10,000. Trader opens a 1 BTC Long (Buy) position at the price of $10,000. As stated previously 1:200 leverage allows the trader to open this position using just 0.005 BTC of their own funds (or the equivalent value in another deposited currency).
Let’s assume that later, the price of 1 BTC increases to $10,100. The trader now closes the position.
- Trader bought assets (Opened the position) at $10,000 and resold them at $10,100 (Closed the position), leaving him with $100 profit!
- The 0.005 BTC Margin that was used to open this position will now be “unlocked” and available for the trader to use again.
- The $100 profit is now added to trader's balance and can be further used for trading or withdrawn.
As seen from the example, Long positions are better in uptrend markets, when the price of an asset is increasing. Profit or Loss made in this case is the difference between the price at which you Opened the position (bought the assets) and the price at which you Closed the position (resold the assets)