Listen to a Business English Dialogue About Long position
Violet: Hi Zachary, have you heard of a “long position” in finance?
Zachary: Yes, I have. A long position is when an investor buys a financial asset, such as a stock or commodity, with the expectation that its value will increase over time.
Violet: That’s right. How does someone profit from a long position?
Zachary: Someone profits from a long position by selling the asset at a higher price than they bought it for, capturing the difference between the purchase price and the sale price as a profit.
Violet: I see. Are there any risks associated with taking a long position?
Zachary: Yes, one risk is that the value of the asset may decrease instead of increasing, resulting in losses if the investor sells the asset for less than they paid for it.
Violet: That makes sense. How can investors mitigate risks when taking a long position?
Zachary: Investors can mitigate risks by conducting thorough research and analysis before investing, diversifying their portfolios, setting stop-loss orders to limit potential losses, and staying informed about market trends and developments.
Violet: Thanks for explaining, Zachary. Long positions seem like a common strategy for investors seeking to profit from rising asset prices.
Zachary: Absolutely, Violet. They’re a fundamental concept in investing and can be an effective way for investors to build wealth over time through capital appreciation.