Short Position

A short position means you've sold a currency pair expecting its value to drop. If you short EUR/USD at 1.0900, you profit when the price declines. A move down to 1.0800 would be 100 pips of profit; a move up to 1.1000 would be 100 pips of loss.

In forex, shorting is structurally identical to going long — you're just on the opposite side of the pair. When you sell EUR/USD, you're selling euros and buying dollars. There's no "borrowing" involved like with stock short-selling. This ease of shorting is one of forex's advantages as a market.

Psychologically, many traders find shorting harder because it feels like betting against something. But currencies are always relative — going short EUR/USD is the same as going long USD/EUR (if that pair existed). Some of the biggest trading opportunities come during panic selloffs or central bank policy shifts that drive currencies lower. Being comfortable on both sides of the market doubles your opportunities.