Going long means buying first.
You profit when the price rises and lose when it falls.
Going short means selling first.
You profit when the price falls and lose when it rises.
Suppose Bitcoin or a stock starts at $100:
• If it rises tenfold to $1,000, the long makes $900 and the short loses $900.
• If it falls to one-tenth of its value, or $10, the long loses $90 and the short makes $90.
Notice the asymmetry from the same $100 starting point.
In this simplified example, a long can lose the original $100, while its upside has no fixed ceiling. A short can make at most $100 if the price falls to zero, but its losses can keep growing as the price rises.
If the price climbs from $100 to $10,000, the short loses $9,900. That is why a short position should be closed quickly when the trade is clearly wrong.
Key Takeaways
- Go long when you expect the price to rise; go short when you expect it to fall.
- Short losses are theoretically unlimited, so short positions require extra care.
- Use a stop loss and control risk on every trade, long or short.