Long, short and three types of orders

7 min read · How you make money on a rise and on a fall, how a market order differs from a limit order, and why you need a stop.

Level:

Short version for experts: tables, lists and screenshots only.

Words in this lesson (9)

Long — Buying in the hope that the price will rise. Buy lower, sell higher.

Short — Selling in the hope that the price will fall: you sell something borrowed, then buy it back cheaper. You make money when the price drops.

Stop — A price chosen in advance at which the trade is closed at a loss, so the loss doesn't grow bigger.

Target (take-profit) — A price chosen in advance at which the trade is closed with a profit.

Leverage — Money borrowed from the exchange. With 10x leverage, your $100 opens a $1,000 position: both profit and loss are ten times bigger.

Liquidation — The exchange force-closes a position when the loss has eaten all the collateral. The collateral is lost.

Volume — How much money or how many units changed hands over a period. A move on high volume is more reliable than one on low volume.

Limit order — An order to "buy or sell at my price or better". It can wait in the order book and may never fill.

DEMO — The DEMO account in MAMAY: prices and fees are real, orders don't go to the exchange, and no real money is at risk.

Two directions

Long — buying in the hope of a rise. Bought at 100, sold at 110 — made 10.

Short — selling in the hope of a fall. This is less familiar, so step by step:

You borrow one coin from the exchange and sell it right away at 100.
The price falls to 90.
You buy the coin at 90 and return it to the exchange.
The difference of 10 is yours.

If instead of falling the price rose to 110, you'll have to buy it back higher and you'll lose 10. In MAMAY all of this is done with one "Short" button; the exchange borrows and returns the coin itself.

In a long position the most you can lose is everything you put in (the price fell to zero). In a short position the price can rise without limit, so a short without a stop is more dangerous.

An order on the exchange

Order	What it tells the exchange	Upside	Downside
Market	"buy right now at the best available price"	fills immediately	the price may be a little worse than what you saw
Limit	"buy at 100 or cheaper"	you get exactly your price	it may not fill if the price never gets there
Stop	"if the price reaches 95 — sell"	limits the loss	in a sharp move it fills a little worse

The stop is a beginner's most important order

A stop is insurance. You decide in advance: "if the price goes here, I was wrong — I'm out."

Without a stop you think: "I'll wait, it'll come back." Sometimes it does. And one time it won't — and it will take everything you earned over months.

MAMAY has a real example: on a DEMO account, three trades without a stop lost $242 in one day. It's broken down in the "Analysis" track, in the lesson "Two liquidations and revenge trading".

Target

A target (also called a "take-profit") is an order that closes the trade with a profit at a price chosen in advance. The stop and the target are set together: before you even enter, you know how much you'll lose in the bad case and how much you'll get in the good one.

How it looks in MAMAY

On the "Terminal" tab, on the right, there's the trading panel:

choose the order type;
enter the entry price, the stop and the target;
enter the size — how much to buy;
click Long or Short.

In DEMO you can click boldly — the trade will happen in DEMO.

↗ Open "Terminal" in MAMAY ▶ Next: leverage and liquidation

This is how it looks in MAMAY: “Terminal”