About terms "short" and "long" positions on Forex
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I am hearing very often these terms in trading "short positions" and "long positions". So the meaning behind it, would be that, when you sell, you better do it for a short period of time, and when you buy, on a longer period. The reason, would be : as the economy tend to expand, prices of companies "equities" tend to increase. What i understand.
But what about the forex market ? As soon prices are : the value of a currency expressed in a value of an other one, why would the price of one, tend to increase more than its binomial ?
When i see this graph :
Im not sure how to interpret it, is it the ratio of volumes, or the ratio of total number of trades ? In the second case, if more people are buying, but at the end the value of the pair is similar, does it mean the volumes of "longue positions" are smaller than "short positions ?
Thanks clarifying -
@seb-0 these are basic slang terms in forex, when you buy a pair it means you went long, and vice versa for sale=short
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@seb-0 I didn't understand all the questions, but..
- The term "short" comes from the borrowing aspect. If you take a short position on Apple stock, you must borrow some stocks to sell them in the market, and later buy the stocks from the market and return your loan. During the position, one can say "you are short of some Apple stock", that is, "you owe somebody some Apple stock and you need to find some". The term "long" is just the natural opposite, and those terms later applied to every asset class outside stocks.
- Those graphs usually have an option to show either volumes or number of positions. I think Oanda shows the volumes.
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@seb-0 That's right, the chart tells how many OANDA clients (in percentage) are buying (LONG) and how many are selling (SHORT) on a certain pair
