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Futures, Leverage & Risk ยท Lesson 2

Long and short

Making money when prices rise โ€” or fall

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Long and short

In this lesson

Calculate profit and loss for long and short trades, and understand why shorts carry open-ended risk.

Key takeaways

  • Long: buy first, sell later โ€” profit if price rises.
  • Short: sell first, buy back later โ€” profit if price falls.
  • A long's loss is limited to the price falling to zero; a short's loss is open-ended without a stop.
  • Short squeezes happen when many shorts are forced to buy back at once.
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Educational information only - not financial advice.

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