It is financial term which means the act of buying stock, commodity or currency with the hopes that it will increase in value. This is also known as bullish.
Going long is one of those financial terms which have several meanings, depending on where it is used. The most common meaning is length of time an investor hold a commodity, security or currency. Going long or long position is usually used in perspective of buying an options contract. Trader can either hold long put or long call option, subject to the position of a primary asset in option contract.
A trader who hopes to get benefit from upward price movement of an asset will go long on “call option”. Long call gives the holder an option to buy an underlying asset at definite price. While on another hand if an investor hopes that price of an underlying asset will fall, will go for long put option. He hold an option to sell specific asset at certain price.
In terms of security, Going Long means the holder of the position own the security with the expectations that price of the security will rise and will generate profit. In Going Long, security is one of the most conformist investing exercise in capital market. In future, going long means that holder of position is indebted to buy a primary instrument at the contract price at expiry. Price that holder pay will be less than the current market price. The container of positon will take profit, if value of a basic asset goes up.
There are few pros and cons of going long in forex trading. Let’s have a look.
Pros:
- Bounds losses
- Price locks
- Merges with momentous market performance
Cons:
- Short term moves and changes
- Suffers in unexpected price
- May position expire before benefit is realized