Forex glossary
Short position
A position whose price-based result in a linear model improves as its closing price falls below its opening price. Retail FX shorts open by selling at Bid and close by buying at Ask; fees affect the net result.
Illustrative example
How does it work in practice?
In a hypothetical linear EUR/USD trade, 10,000 EUR is sold at bid 1.1000 and repurchased at ask 1.0980 USD per EUR. Price profit is 20 USD before costs; both rates are execution prices.
Why do buying and selling use different prices?
Two prices and two position directions
EUR/USD model: bid 1.1000 and ask 1.1002 USD per EUR; one pip is 0.0001. No commission, financing or slippage.
On a narrow screen, the table can be scrolled horizontally.
| Term | What it describes | Shared example |
|---|---|---|
| bid and ask (bid-ask prices) | The client sells at bid and buys at ask. | Buying 1,000 EUR costs 1,100.20 USD; selling it receives 1,100 USD. |
| spread (bid-ask spread) | Ask minus bid, rather than a separate amount to deduct again. | 1.1002 − 1.1000 = 0.0002, or two pips. |
| Long position (bullish position) | Buying opens a long; selling closes it. | Immediately closing 1,000 EUR at unchanged quotes gives −0.20 USD. |
| Short position | Selling opens a short; buying it back closes it. | Selling 1,000 EUR at bid and repurchasing at unchanged ask gives −0.20 USD. |
Takeaway: Direction determines the order of buying and selling. P/L calculated from the correct fills already reflects the bid–ask difference.
Change an assumption, see the result
What changes if…?
Compare a short’s entry Bid with the Ask for its immediate close. Change the gap and position quantity, without using Bid alone to value the close.
EUR/USD model: 1 pip = 0.0001. Long: buy at Ask, close at Bid; short reverses the sides. Quotes stay unchanged between entry and exit. No slippage, commissions or swap.
Check your understanding
Calculate short P/L from opening bid and the actual repurchase ask.
Show the answer and explanation
+20 USD
(1.1000 − 1.0980) × 10,000 = 20 USD. Closing the short buys at ask rather than selling at bid.
From quotes to position units
Step 4 / 10 · 0 / 10 reviewed
View the full sequence →Progress is saved only in this browser.
Try the numbers in a calculator →
Read the fuller explanation
Related terms
Sources and documentation
- MetaTrader 5: basic trading principles
Orders, deals and positions; FOK, IOC and partial-filling policies.
Document read:
The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.