Buy transaction (buy, buy, long transaction, long, long)
What's a long?
Long or buy transaction (buy, buy, long transaction, long) - is the name of a buy transaction, which is opened by a market participant in the expectation to profit from the growth of the price of an asset. The very name of a buy long or long trade is a slang term and appeared on the stock exchange because the growth of stock prices is considered to be a more time-consuming process than their fall.
Market participants opening buy trades, i.e., who play to increase the price of an asset are called bulls. Bulls are believed to be pushing the price up with their horns.
The opposite of a long trade is Sell or Short (short, short trade)Accordingly, market participants who play to lower the price of an asset are called bears. It is believed that bears knock the price down with their paws.
What is a long trade on ?
A buy deal is also called a long deal or a long. A buy transaction in the foreign exchange market implies the purchase of the base currency for the quote currency.
For example, in the EUR/USD currency pair, the base currency is EUR, and the quote currency is USD. Accordingly, opening a long in the EUR/USD pair, a trader buys a certain amount of euros for dollars, counting on the growth in the value of the European currency.
When to open a buy position?
As a rule, a long trade is opened on the assumption of further growth of the base currency in a currency pair.
In fundamental analysis, it can be the publication of positive macroeconomic statistics, increase in the Central Bank interest rate, etc.
From the point of view of technical analysis, longs are opened when the price bounces from the levels of support (lower boundary of the uptrend). As a rule, buy positions are used only when trading in an uptrend and on a rebound from the lower boundary of the flat. Opening long deals against the trend carries high trading risks.
A buy position in MetaTrader 4 is opened with a Buy order, but a long position can also be opened with pending orders BuyLimit and BuyStop.
When to close a Buy trade?
As a rule, longs are closed when the price reaches the opposite boundary of the price channel (resistance line of the uptrend or flat). In the MetaTrader 4 terminal, buy trades can be closed using the set TakeProfit order or manually. Profit on the transaction will be equal to the difference between the invested and received funds in the base currency.