Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Web Trader MT5
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Longs
Longs are the traders holding long positions in a market, or, collectively, the total of those bullish positions. When a desk talks about the longs getting squeezed, or the market being full of longs, it is describing positioning: how many participants are betting on a rise and how exposed they are if the move goes the other way.
The concept matters most at extremes. When almost everyone is already long, there may be fewer additional buyers to push the price higher, while a large number of holders may sell if prices fall. This can increase the risk of a sharp reversal as crowded longs rush for the exit. Traders watch positioning data for exactly this reason.
Example: After a long rally, futures data shows speculative longs in crude oil at a record high, and a contrarian trader takes it as a warning sign, reasoning that with so many already positioned for higher prices, even a small piece of bad news could trigger a cascade of selling.
Lot
A lot is the standard unit in which trade size is measured. In foreign exchange, one standard lot is 100,000 units of the base currency, with smaller denominations for smaller accounts: a mini lot is 10,000 units, a micro lot is 1,000, and some brokers go smaller still. Trading in lots standardises size so that everyone is speaking the same language about how big a position is, and it directly determines how much each pip of movement is worth.
The bigger the lot, the more money rides on every tick, which is why position sizing in lots is a central part of risk management. An oversized position relative to the account can magnify losses.
Example: A trader with a small account opens a single micro lot of EUR/USD rather than a full standard lot, so that a 50-pip move against her costs a few dollars rather than several hundred, helping to manage the potential loss in line with her risk limit, depending on trading costs and other applicable charges.
Lot
A measurement used to count the size of a single trade. Typically, investors start trading with 1 lot.
Lot-based commission
A fee charged by brokers for facilitating a trade that is based on the lot size.
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