The Meaning of the Expression “Go Long” in Forex Trading
There are some terminologies used in the foreign exchange market. “Go long” means that you can place a buy option with the expectation that the value of your asset is going to increase.
The “Go Long” is the direct opposite of the “Goo Short”, in this aspect you will expect the price of a particular product to fall. What is mostly done in the Forex market is the purchase of the pair of currencies.
What Should the New Traders Know?
For you to trade on the foreign exchange market, what you do most times is to buy or sell the pair of currency. There is a base and quote currency for all the currencies made available. It is always in a particular format USD/JPY = 100. Looking at this kind of scenario, the base currency is the USD, and the quote currency is the Japanese Yen. This quote indicates that $1 is equivalent to 100 Japanese Yen.
There is every pair for each of the currency pair. What you do most times is to go long on a particular one, and you can as well go short on the other. Now if you are betting the dollar, it will be with the mind that it will be more than 100 Yen very soon.
For this reason, when the currency pair is in a long trade, you are going long on, or you are buying. Usually, the dollar USD should simultaneously go short on the JPY. Then you will be selling the JPY when a stock is short as you sell those shares.
So that you can get an example from the stock market, it is essential to get a sample from the stock’s produced by the company such as APPLE. If you pair the APPL/USD, you figure out how the relationship works before you place your trade.
How to go long
Going by the fact that the traders can buy and sell the currency at the same time, speculations can be made on the downward and upward trend. When the trader goes long, it is an indication that a buy position is opened because the trader believes that the value of the currency may probably rise. The value is going to rise if the prediction is correct.
The changes in value can be measured with the pips. A pip can be said to be 0.0001 of the value a quote currency has, and the only exception is the Japanese Yen in which the value of the pip can be said to be .01
Why Go, Long?
The technical and fundamental development is the very reason why the traders may decide to go wrong.
To make use of the fundamental analysis, the traders will be looking for the economic news that is related to the trade they are about to place. If there is news that surpasses the expectation of the economist, it is an indication that the economy is doing fine, and you can place it long.
Looking at the technical reasons, this can be considered going by the fact the price of the currency just broke through a particular level. With this, there will be a strength that surprises in the market, and it will lead to an imbalance in the market.