In trading, you can profit whether the market goes up or down depending on the type of position you take. The two most common trade types are long (buy) and short (sell) positions.
What Is a Long Position?
A long position is opened when you believe the price of an asset will rise. In this case, you buy at the ask price and close the trade by selling at the bid price.
You make a profit if the bid price at closing is higher than the price you originally paid.
Example: You buy EUR/USD at 1.1000 and close the position at 1.1050 → you earn the difference.
What Is a Short Position?
A short position is opened when you expect the price to drop. You sell at the bid price and later buy back at the ask price to close the trade.
You profit if the ask price at closing is lower than your initial selling price.
Example: You sell GBP/USD at 1.3000 and close at 1.2900 → you gain the price difference.