Position definition

What is a position?

A position is the expression of a market commitment, or exposure, held by a trader. It is the financial term for a trade that is either currently able to incur a profit or a loss – known as an open position – or a trade that has recently been cancelled, known as a closed position. Profit or loss on a position can only be realised once it has been closed.

A position is defined by size and direction. This means that your position can vary depending on the quantity of the asset, and whether you are buying or selling the asset. There are two main types of position: long positions and short positions. A long position means that you are buying an asset or speculating that the asset will increase in value, whereas a short position aims to make a profit when an asset’s price decreases.

Positions are the way in which a trader will hope to make a profit – a position is profitable or unprofitable depending on whether the market price moves in favour of, or against, the trade.

Learn how forex trading works

Find out more about forex trading, including what the spread is and how leverage in forex works.

Examples of a position

Let’s say you believe GBP/USD is going to increase in price. You decide to buy into the market, taking a long position on the pound rising in value. The market does increase as you predicted, so you close your position and lock in your profit.

If you thought the price of the pound was going to fall instead, you would have taken a short position. This would mean selling GBP/USD in anticipation of the market decline.

The definition of a position can vary depending on which asset you are trading. For example, a position that is for the immediate delivery of a currency or commodity is referred to as ‘spot’, whereas a position with a set transaction date is called a futures position.

Build your trading knowledge

Discover how to trade with IG Academy, using our series of interactive courses, webinars and seminars.

A - B - C - D - E - F - G - H - I - L - M - N - O - P - Q - R - S - T - U - V - W - Y

See all glossary trading terms

Contact us

Support line is available 24hrs a day from 8am GMT Saturday to 10pm GMT Friday

+65 6390 5118

You can also email us helpdesk@ig.com.sg

Visit our storefront office at 9 Battery Road #01-02 MYP Centre Singapore 049910

Please note that our storefront office will be temporarily closed from 7th April 2020 till further notice.