Long vs. Short
If you wish to buy a Bitcoin, for instance, then your account will grow in value as Bitcoin’s price increases. If Bitcoin price decreases, then your account loses value accordingly. Apart from a standard trade (purchase), LiveTrader platform allows you to open a position that will increase in value as the cryptocurrency decreases in price. This is referred to as selling or going short, as opposed to buying or going long.
Example: Going Long
Say Ethereum market price is $314.7. You think that the Ethereum price will go up, so you buy 200 of ETH’s at $314.7. This is equal to the position value of $62,940.
If your prediction is correct and ETH price climbs, you may decide to fix a profit. Ethereum price is $354.2 and you close your position.
To calculate your profit, you need to multiply the difference between the closing price and the opening price of your position by its size.
354.2-314.7=39.5, which you multiply by 200 and get a profit of $7,900 because you had a “long” position.
Example: Going Short
The announcement is a disappointing one, and the Bitcoin drops to $7,354. You’re ready to secure your profit, so you buy back 10 BTC at $7,354
Because this is a short position, you deduct the closing price ($7,354) from the opening price ($7,400) of your position to calculate profit, before multiplying by its size of 10.
7,400-7,354=46, which you multiply by 10 and get a profit of $460 because you had a “short” position.
To calculate the profit or loss earned from a long/short trade, you multiply the size of your position by the difference in points between the price when you opened it and when you closed it. With both long and short trades, profits and losses will be realised once the position is closed.