Being long means holding financial assets, such as stocks, bonds, or foreign currency, in the state in which they were bought. Being short means remaining in the state in which they were sold1. A long position is one in which the long side is larger, a short position is one in which the short side is larger, and a position in which they balance is called square2.

Consider a hypothetical example in which a trader buys 3 contracts of a futures contract (a contract is the unit of quantity for futures) and settles 1 by an offsetting trade, a resale. The remaining 2 contracts leave the trader long, with a long position of 2 contracts. Selling the remaining 2 contracts balances the two sides, and the position becomes square.

Some sources use position and open position with the same meaning. Japan Exchange Group's glossary directs readers from the entry "position" to the entry for open position (tategyoku)3. Daiwa Securities' glossary explains that trades left open without being closed out are called a "position" and are also called "tategyoku", the open position4. On this site, "open position" (Japan Exchange Group's explanation) is used when counting the quantity of exchange-traded trades that have not been settled. "Position" (Daiwa Securities' explanation of long, short, and square positions) is used when saying whether the long or the short side is larger.

Notes

  1. Daiwa Securities, "買い持ち" (Long holding (kaimochi)), in its "金融・証券用語解説集" (Financial and securities glossary) (in Japanese). ↩

  2. Daiwa Securities, "ロングポジション" (Long position) and "ショートポジション" (Short position), in its "金融・証券用語解説集" (Financial and securities glossary) (in Japanese). The term is described as used in foreign exchange trading, margin trading, and futures and options trading. ↩

  3. Japan Exchange Group, "ポジション" (Position), in its glossary (in Japanese). The entry refers readers to "建玉" (open position (tategyoku)). ↩

  4. Daiwa Securities, "ポジション" (Position), in its "金融・証券用語解説集" (Financial and securities glossary) (in Japanese). ↩