In online trading business, a position depicts the state of a trader when he enters the market. To define in simple terms, it can rightly be said that when a trader enter the market, it is called an open position and when a trader exit the market, it is called closed position.
In order to make profits in business, one should be aware of the functions of these various positions and should be well-acquainted of implementing them so that you can minimise the risks of losing and earn the maximum amount of profit from it. This is what I am saying from my personal experience.
When I make up my mind to invest in the market, the first thing I did was taken up a fx training course to arm myself with the ins and outs of the market. And believe me; this helps me a lot in strengthening my position in the market.
Here, I am going to share some information on forex open and closed position with the readers who are thinking of investing in the business.
Let’s start with open forex position definition
An open position in fx depicts the trader holds a certain quantity of financial instrument. Open position refers to a situation where the trade is still not closed but active. This position also depicts the open positions are made by the trader and unless and until the trade is open, the trader can incur profit or loss. Open trades remain active for a longer period of time.
However, once you close your open position after apprehending profit or loss, the trade will no longer be active. Open position trade exists in respect of the following parameters –
- Short or sell position
- Buy or long position
For better understanding I am giving an example here – A trader who owns around 500 shares for a trade is said to create an open position in the market. Similarly, when the trader sells 500 shares, it means the position is closed.
Now let’s discuss on forex close position definition
Implementing a security transaction which is almost opposite of an open position is defined as fx close position. Closing a long position in trading implies selling your assets back to the market while closing a short position involves buying assets back. The alteration between the prices when a trade was opened and initiated and the price when it was closed shows the gross profit for that security position.
How to close all position forex?
- For closing a long position in the market, you need to sell an exact amount of currency pair to reduce a long position to zero.
- If you are having a long position of $100,000 Euro/US dollar, you have to sell $100,000 Euro/US dollar back to the market to reduce your holding of Euro/US dollar to zero.
- If you get more while selling than what you paid for buying the order, you will earn a profit. If you earn less, it means you incur a loss.
- For closing a short position, you must buy enough currency pair to bring your back your trading position to zero.
I hope, from my above definitions and examples, you all get proper idea about open closed position forex. Still, if you have any query or want to share your personal thoughts with us, feel free to write in the below comment section. I will be delighted to hear from you.