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What does net long mean?

What does net long mean?

Investors are net long when they own more long positions than short positions in a securityderivative, or fund. It could mean that a fund manager, for instance, is net long on all of the holdings in the funds, i.e., the fund holds more long positions than short positions. Some funds could be the opposite and be net short.

A long position - or to be “long a stock” - means that an investor has share ownership and will receive economic benefit if the share price rises, and vice versa. Creating and maintaining a long position is simple: an investor buys and owns the investment. Some asset managers will employ a “long-only” strategy, only buying and selling securities in the portfolio as a management strategy - they will not use options or shorting strategies as a result.

To be short means to have short-sold the security or derivative in question. A short position is a bearish play on a security which an investor believes will decrease in price in the near future. If the investor expects the security will depreciate, they can sell it on the market without owning it. Should that expectation be proved correct, the investor can buy it for less before “covering” their position – keeping the difference in profit.

Normally net long and net short are used in reference to a specific asset class or sector or region. For example, an investor may be “long China,” or “short the American auto industry.” Most investors are net long and own securities outright instead of betting against their depreciation. In either case, traders can use technical indicators to maximize the success of their approach. Artificial intelligence can alert traders to advantageous opportunities as it identifies patterns or figures on a price chart. A.I. can help investors find trade ideas and spot opportunities to make advantageous trades whether they are long or short an asset.

Keywords: derivatives, fund management, long and short positions, asset classes, net long, active trading,