What is a Long Position?
FAQ: What is a Hedge Fund's Long Position?After running this blog for several years, I come across many familiar questions so I am putting together a frequently asked questions page to help answer some of these basic hedge fund questions as well as posting the answers here.
To start, here is a quick question and answer on what is a long position.
Question: I often hear about a hedge fund having a long position or investors saying they are "long" a certain stock. What is a Long Position?
Answer: This is a common question, especially from those just getting acquainted with the industry's terminology. A long position is quite simple really: the long position is one that makes the investor money when the price of the asset increases. This is the rough opposite of a short position which makes money for the investor if the asset's price declines. A long/short fund will use a variety of tools including short positions and leverage in order to make a return, not just long positions on assets.
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