Net Position
The difference between long and short positions in a particular instrument or market.
Net position is your overall exposure after offsetting longs against shorts. Long 3 lots and short 1 lot leaves a net position of long 2 lots.
Net position is your overall exposure in a market after accounting for both long and short positions. If you're long 3 lots and short 1 lot, your net position is long 2 lots. It represents your actual directional exposure.
How It Works
- Long 5 lots EUR/USD, Short 2 lots EUR/USD = Net long 3 lots
- Net position determines profit/loss from price moves
- Zero net position = fully hedged
- Reported in COT (Commitment of Traders) reports
Trading Tips
Always know your net exposure
Multiple positions can hide true risk
Brokers calculate margin on net position
Net Position Example
Say you are long 3 lots of EUR/USD from different entries and short 1 lot as a hedge. Your net position is 2 lots long: that is the exposure earning or losing on the next 100-pip move, about $2,000 either way.
How Traders Use Net Position
Always know the net before adding. Multiple tickets hide true exposure, so consolidate mentally to one number per pair. If you cannot state your net instantly, you hold too many tickets.
Related Terms
Put Your Knowledge Into Practice
Compare regulated brokers and find the best one for your trading style.