Long and short: what going long and going short means in crypto
Long and short are the two directions you can trade in. Going long means making money if the price rises; going short means making money if it falls. The second one is what everyone finds hard to grasp at first, so here it is with examples.
By Bárbara Ruiz·Updated ·3 min read
Going long
This is the intuitive one: you buy because you think the price will rise. If you buy 0.1 BTC at 60,000 USDT (6,000 USDT in total) and it rises to 63,000, the position is worth 6,300: you make 300 USDT. If it falls to 57,000, you lose 300.
You can go long by buying on the spot market, without leverage, or by opening a long in futures. On spot, the worst that can happen is the coin going to zero. In futures, getting liquidated before that.
Going short
A short means selling something you don’t own yet, to buy it back later for less. In futures you don’t need to borrow the coin: you open a contract that gains value when the price falls.
Same example the other way round: you open a short of 0.1 BTC at 60,000 USDT. If it falls to 57,000, you make 300 USDT. If it rises to 63,000, you lose 300.
| Price at close | Long of 0.1 BTC from 60,000 | Short of 0.1 BTC from 60,000 |
|---|---|---|
| 66,000 | +600 USDT | −600 USDT |
| 63,000 | +300 USDT | −300 USDT |
| 57,000 | −300 USDT | +300 USDT |
| 54,000 | −600 USDT | +600 USDT |
The risk isn’t symmetrical
A long and a short don’t carry the same risk. In a long, the most you can lose is what you put in, because the price can’t fall below zero; in a short, the price can rise without limit, and rallies in crypto tend to be sharp.
- In a long, the price can only fall to zero: the maximum loss is what you put in.
- In a short, the price can rise 50%, 100% or more. Without a stop loss, the loss has no ceiling; with leverage, liquidation comes much sooner.
- Rallies in crypto tend to be fast and violent when many traders are short at the same time: shorts get closed one after another and that pushes the price even higher.
That’s why, in a short, the stop loss isn’t optional.
The cost of keeping it open
In perpetual futures, longs and shorts pay each other the funding rate every few hours. When the market is very bullish, longs pay shorts; when it’s bearish, the other way round. If you hold a position for days or weeks, that cost matters.
What shorts are used for, besides speculating
Some traders open a short to hedge: if they hold BTC on spot and fear a drop, a short of the same size offsets what the portfolio loses for as long as it lasts. It’s a tool, not a bet, as long as the size and the stop have been thought through.
Frequently asked questions
What does being long on Bitcoin mean?
Having a position that makes money if the price of Bitcoin rises, whether it was bought on spot or through a long futures contract.
Can you short on spot?
Not on regular spot: you can only sell what you own. To go short in crypto, traders use futures or margin trading.
Which is riskier, long or short?
For the same size, the short, because the loss has no limit if the price rises. With a well-placed stop loss, you decide the risk on both.