Open position

DEFINITION of Open position

The open position refers to still active and not yet closed. Any stock or equity which is owned is said to be an open position.

WHAT IT IS IN ESSENCE

An active trader may have several suchlike positions at any certain time. This position may be a long or a short sale. It will change freely in value as market conditions change. That means, the price of the underlying equity of such position rises and falls.

A long-term investor typically holds one or more open positions for days or even years at a time.

A day trader wants to close any open positions before or at the close of trading each day. Day traders can see a danger in holding an open position overnight. While a long-term investor is not as fearful of short-term market fluctuations which have influence the day-to-day price of an open position.

This kind of position becomes closed when the stock is sold or the open position is off (as in the case of a short sale).

The open position represents the difference between total spot/forward purchases and spot/forward sales in a currency on which an exchange risk is run. Also, it can be the difference between the totals of foreign currency assets and liabilities.

HOW TO USE

Your open positions are the trades you have made that are still able to incur a profit or a loss. When a position is closed, all profits and losses are completed and the trade is no longer operate.

To close an open position, you need to inverse the trade made to open it (selling any assets that have been bought. Or vice versa. On the other hand, this can happen automatically. At the moment in which a position reaches its expiry date. Or has a stop or a limit in place which is subsequently filled, for example.

There are some deviations to this. Because some trades will always run until their expiry. Such, trader cannot close, and some trades have no expiry.