A long position is one that profits if an asset's price rises. A short position is the opposite: one that profits if the price falls. People talk about being "long" or "short" an asset, and the terms are used for shares, currencies and crypto alike.
Going long
The simplest long position is buying an asset and holding it. If you buy ISK 100,000 of bitcoin and the price rises 10%, it is worth ISK 110,000. If the price falls 10%, it is worth ISK 90,000. The most you can lose is what you put in, because a price can't go below zero.
So when you buy crypto and hold it, you have a long position, whether or not you use the word.
Going short
A short position is taken through short sellingShort sellingSelling an asset you don't own in the hope of buying it back for less. A short seller profits if the price falls. or, in crypto, usually through derivatives such as perpetual futuresPerpetual futures (perps)A derivative with no expiry date that tracks the price of a crypto. Regular payments keep it close to the market price, and it allows leverage.. If you have a short position of ISK 100,000 and the price falls 10%, you gain ISK 10,000. If it rises 10%, you lose the same amount. There is no upper limit on the loss, because the price can keep rising.
Positions with derivatives
With derivatives you can go long or short without owning the asset. These positions usually come with LeverageLeverageTrading with borrowed money, which multiplies both gains and losses and can wipe out your whole stake in a short time.: you put up MarginMarginMoney you put up to open a leveraged position. If losses eat into it down to a minimum, the position is closed or you are asked for more money. and control a bigger position. Gains and losses are multiplied, and if losses eat up the margin, the position is closed in a LiquidationLiquidationWhen a loan or leveraged position is closed automatically because the collateral or margin no longer covers the debt..
People use these positions for two reasons:
- Speculation. Betting that a price will rise or fall.
- Hedging. Someone who owns bitcoin can take a short position to protect against a fall for a while, because the gain on the short offsets the loss on the holding.
Leveraged positions are risky. A small move in the wrong direction can wipe out the margin very quickly.
Everything in Myntkaup Learn is written and regularly reviewed by the Myntkaup editorial team. It is for education and is not investment advice. Editorial policy. Updated 2 November 2026.