Long Position

A long position means you bought an asset and hold it expecting the price to rise. Ordinary stock buying is a long position, so most individual investors are always long without thinking of it in those terms.

The payoff is straightforward. Buy at $50 and sell at $70 and you gain $20; if it falls to $30 you lose $20. What matters most is the worst case: a price cannot go below zero, so a long position's loss is capped at the money you put in.

This is the decisive difference from a short position. There is no ceiling on how high a price can go, so a short's loss is theoretically unlimited. A long is the mirror image, with unlimited upside and a floor on the downside, which is a large part of why long-term investing is done long.

That safety net only holds if you did not borrow. Going long with margin or leveraged products can cost more than your original stake, and a large enough loss can force liquidation. Remember that a long only risks your principal when it is entirely your own money.