This article explains the difference between “long” and “short” positions in plain English, without the usual financial jargon. It breaks down how buying assets differs from selling what you don’t own, why professionals use both together, and why short positions carry unique risks. By the end, readers can confidently understand what investors mean when they say they’re long one thing and short another.

Contents

1. Introduction: A Plain-English Guide for Normal Humans (and a Few Finance Nerds)

If you spend any time around investment people—particularly the sort who drink too much burnt coffee and shout at Bloomberg terminals—you’ll eventually hear someone talk about being “short” or “long.”

And if you’re a normal person, your reaction is perfectly sensible:
What the fuck does that even mean?

Let’s fix that.

2. Long: The Normal One (You Buy, Hope It Goes Up)

A long position is simply buying something because you think it will increase in value.
Shares. Bonds. Commodities. Crypto if you’re feeling spicy.

You own the thing. If it goes up, you win.
If it goes down, you feel sad and possibly reconsider your life choices.

This article is part of my “WTF is…” explainer series, where I expand on knowledge that isn’t completely obvious from first glance.

Example:
You buy £1,000 of Apple shares because you believe the iPhone 47S Ultra Quantum Deluxe will sell well.

• Apple goes up → you profit
• Apple goes down → you lose

That’s it. Long = buy low, sell high. The classic, vanilla, missionary-position of investing.

3. Short: The Spicy One (You Sell Something You Don’t Own)

A short position is betting that something will go down in value.

But here’s the mind-bender:
You sell the asset before you buy it.

How the fuck does that work?
You borrow the shares from someone else, sell them immediately, wait for the price to drop, then buy them back cheaper, return them, and pocket the difference.

Example:
You short Tesla at £200.

• Price falls to £100 → you buy it back cheaper → you make money
• Price rises to £300 → you’re screwed and lose money

Short = sell high, buy low.
It’s the investment equivalent of confidently telling your partner you can fix the boiler without reading the manual—and sometimes it goes exactly as badly as that sounds.

4. Why Investors Use Shorts and Longs Together

professionals (fund managers, hedge funds, et cetera) don’t just pick one.
They blend longs and shorts to manage risk and refine strategy:

4.1 Hedging (When You Don’t Want to Get Fired)

You own a stock but want to offset some risk.
Take a small short position elsewhere.
If markets tank, your short softens the blow.

4.2 Tactical Plays

You see a sector rising (go long) and another collapsing (go short).
Classic pairs trade.

4.3 Pure Speculation

Sometimes you just have a high-conviction view.
Long the winners.
Short the losers.
Sleep… somewhere between peacefully and anxiously depending on how correct you are.

5. How Shorts Can Go Really, Really Wrong

Going long → maximum loss = what you invested.
Going short → maximum loss = theoretically infinite.

Why?
Because a stock can only go to zero…
…but it can go up forever.

That’s why short sellers occasionally get wiped out so dramatically that people make Netflix documentaries about them.

This asymmetry is why many professional shorts use strict risk limits, derivatives, or hedges, and why retail investors often underestimate how dangerous shorts can be.

6. Conclusion: So, In One Sentence

• Long = you buy something because you think it’ll go up.
• Short = you sell something you don’t own because you think it’ll go down.

That’s it.
Now when someone says “we’re long X, short Y,” you can smile, nod, and know exactly what the fuck they’re on about.