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The Poor Little Rich Boy

03/06/10 7:36 PM

#57546 RE: hdwrench #57539

A long position is when you purchase the shares outright and hold them.
A short position is when you borrow the shares and sell them, planning to reimburse the lender of those shares later with shares that you purchase...hopefully at a lower price...therefore netting a profit. Make sense?

If you buy long you make a profit on the increase of share price, and the potential for loss is limited.
If you sell short, you make a profit on the decline of share price, and the potential for loss is unlimited. (You lose money when the share price goes up).