In margin trading, understanding long positions and short positions is key for traders. Let's run through these two terms before we move on to explaining how long and short work.

 

• Long: Traders maintain long positions, which means that they expect the price of a coin to rise in the future. If the price moves in the desired direction — upward — you can buy at a low price, and then sell at a higher price. In this way, you can profit from the price difference.

 

With margin trading, you can borrow USDT to buy/long more coins, and return the borrowed USDT and interest once you sell the coins.

 

• Short: Traders maintain short positions, which means that they expect the price of a coin to drop in the future. If the price moves in the desired direction — downward — you can sell at a high price, and then buy at a lower price. In this way, you can profit from the price difference.

 

Margin trading lets you borrow the corresponding coins to sell/short more coins, and then return the borrowed coins and interest after you buy back coins.

 

Long

Let’s suppose Trader A expects the BTC price to rise in the future.

Factors

Trading pair: BTC/USDT

BTC price: 50,000 USDT

Leverage: 5x 

Suppose Trader A wants to long 1 BTC at 50,000 USDT. Currently, Trader A has an available balance of 10,000 USDT in their Spot Account. They can buy 1 BTC with 5x leverage. Once the long order is placed, the system will automatically borrow 40,000 USDT to buy 1 BTC at the price of 50,000 USDT.

 

Two days later, the BTC price rises to 52,000 USDT, at which time Trader A sells 1 BTC and manually repays the borrowed 40,000 USDT. They can earn a profit of 2,000 USDT* based on the following calculation: 

 

Profit = (52,000 − 50,000) × 1

 

Short

Let’s say that Trader B expects the BTC price to drop in the future. 

 

Factors

Trading pair: BTC/USDT

BTC price: 50,000 USDT

Leverage: 5x 

Suppose Trader B wants to short 0.8 BTC at 50,000 USDT. Currently, Trader B has an available balance of 10,000 USDT in their Spot Account. They can sell 0.8 BTC with 5x leverage. Once the short order is placed, the system will automatically borrow 0.8 BTC to short at the price of 50,000 USDT. At this time, the total assets of Trader B's Spot Account are 50,000 USDT.

 

Two days later, the BTC price drops to 48,000 USDT, at which time Trader B buys 0.8 BTC with 38,400 (0.8 × 48,000) USDT and manually repays the borrowed 0.8 BTC. They can earn a profit of 1,600 USDT* based on the following calculation:

 

Profit = 50,000 − 38,400 − 10,000

 

*Spot trading fee and interest are not included in the above examples. To learn more about fees calculated, please refer to Bybit Margin Trading: Fees Explained.