Long position: how it makes money and how much you can lose

A long is a trade opened in expectation of a price increase. On the spot market, it simply means buying the asset and holding it. On the contract market, i.e. derivatives, it means opening a position whose value rises along with the price. You profit when the sell price is higher than the entry price, and lose when it is lower.

With an unleveraged long, the largest loss is the entire amount invested, because the price cannot fall below zero. With leverage, the loss can build up faster, and the position will be closed by force (liquidation). A common mistake is equating a long with long-term buying. It is only the direction of a bet, and the time horizon can be minutes or years.