Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose. Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose.
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What is a position?
A position is the expression of a market commitment, or exposure, held by a trader. It is the financial term for a trade that is either currently able to incur a profit or a loss - known as an open position - or a trade that has recently been cancelled, known as a closed position. Profit or loss on a position can only be realized once it has been closed.
A position is defined by size and direction. This means that your position can vary depending on quantity of the asset, and whether you are buying or selling the asset. There are two main types of positions: long positions and short positions. A long position aims to make a profit when an asset's price decreases.
Positions are the way in which a trader will hope to make a profit - a position is profitable or unprofitable depending on whether the market price moves in favor of, or against, the trade.
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Examples of a Position
Let's say you believe GBP/USD is going to increase in price. You decide to buy into the market, taking a long position on the pound rising in value. The market does increase as you predicted, so you close your position and lock in your profit.
If you thought the price of the pound was going to fall instead, you would have taken a short position. This would mean selling GBP/USD in anticipation of the market decline.
The definition of position can vary depending on which asset you are trading.
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Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors. We advise you to carefully consider whether trading is appropriate for you based on your personal circ*mstances. You may lose more than you invest. We recommend that you seek independent advice and ensure you fully understand the risks involved before trading. The information on this website is not directed at residents of countries where its distribution, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
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