LEARN TO TRADE · Beginner · 6 min read · 3 Nov 2026 · Navion Pro Research
Going Long and Going Short: How You Can Trade a Falling Price
Most people think of trading as buying low and selling high. With CFDs, you can also do it the other way round: sell first, and buy back later at a lower price. This guide explains both directions, with worked examples, and the one way a short trade is riskier.
Trading leveraged products carries a high level of risk to your capital. Losses can exceed deposits. Past performance is not an indicator of future results.
Key Points
- Going long means trading on a price rising. You open by buying and close by selling.
- Going short means trading on a price falling. You open by selling and close by buying back.
- A long trade can lose at most what the asset is worth. A short trade has no ceiling, because a price can keep rising.
- Overnight swap rates can differ for long and short positions, so check both before you hold a trade overnight.
Two directions, one market
Every CFD price has two sides: a sell price and a slightly higher buy price. Going long or short is simply a choice of which side you start on.
Picture a price standing in a doorway. A long trade gains if the price walks forward. A short trade gains if it walks back. Either way, what counts is how far it moves, and in which direction, while your trade is open.
Going long, step by step
This example is for illustration only. The price and leverage are not real figures.
- Gold trades at $3,900 an ounce. A trader expects it to rise.
- They buy 0.01 lot, which is 1 ounce. The position is worth $3,900.
- Gold rises to $3,950, and they sell to close. The gain is $50.
- If gold had fallen to $3,850 instead, the loss would have been $50.
Going short, step by step
Same market, same example price, the opposite view.
- Gold trades at $3,900. A second trader expects it to fall.
- They sell 0.01 lot, or 1 ounce, to open the trade.
- Gold falls to $3,850, and they buy back to close. The gain is $50.
- If gold had risen to $3,950 instead, the loss would have been $50.
The same $50 move made one trader money and cost the other. Direction is the whole trade.
Long and short side by side
| Long | Short | |
|---|---|---|
| You expect the price to | Rise | Fall |
| To open, you | Buy | Sell |
| To close, you | Sell | Buy back |
| You gain when the price | Rises above your entry | Falls below your entry |
| The most a price can move against you | Down to zero | No upper limit |
| Overnight swap | The rate for long positions | The rate for short positions, which can differ |
Why a short trade carries a different risk
A price can only fall as far as zero. So on a long trade, the price can only move so far against you.
A price has no ceiling. On a short trade, every dollar the price rises is a dollar against you, and there is no point where it must stop. Sudden jumps can happen on surprise news, which is why a stop loss matters even more when you are short.
In practice, leverage means either kind of trade can use up your margin long before a price reaches zero or doubles. But the open ended risk is worth understanding before your first short.
Why traders go short
- To trade a view that a price will fall. For example, after weak company results or a rise in interest rates.
- To offset another position. A trader who holds shares might go short on a related index to soften the hit if the market falls. This is called hedging, and it has its own costs and risks.
- Because markets fall as well as rise. Being able to trade both directions means a falling market is not just something to wait out.
Before you go short: five checks
- Know your reason. Write down why you expect the price to fall.
- Set a stop loss above your entry. Decide the price at which you will accept you are wrong.
- Check the swap for short positions. It can differ from the long rate.
- Check the calendar. Data, results or central bank decisions can push a price up sharply.
- Size the trade for a sudden jump. Ask what happens if the price moves sharply against you before your stop can close the trade.
Risk disclosure: Trading involves significant risk of loss and is not suitable for all investors. Past performance is not indicative of future results. This brief is for information and education only. It is not investment advice, a recommendation or an instruction to buy or sell anything. The likely market reactions described here are our assessments of what could happen, not predictions, and markets can and often do move differently. Figures and forecasts come from third party sources and may change. Make your own decisions, and consider independent advice if you are unsure.
