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March 20, 2018

Question:What do Long/Short and Pip mean in financial market?

Answer:

Short – This term refers to selling trades. The term short is used because when you sell, you have a less of the sold assets. “Going Short” means, entering a sell trade, which will sell an asset.

Long – This term refers to buying trades. Long comes from “belong” as in “belongs to me”. “Going Long” means entering buy trades, which you buy an asset.

Pip – This refers to the smallest possible movement in the market. In most cases, it refers to the change in the value of 4th digit following the period. The value of the pip is usually calculated by dividing the total amount of trade with 10,000.

For example, let’s we open a trades with $20,000, we will then divide $20,000 by $10,000, meaning that each pip is worth $2.

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