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Open Position

An open position refers to an active trade or investment that has not yet been closed or settled. It can involve buying or selling a financial instrument, such as stocks, bonds, or derivatives, without closing the position by taking an opposite action. Open positions are subject to market risk until they are closed, and traders and investors monitor them closely to determine when to exit the trade profitably or limit losses.

Example

A trader buys 100 shares of Apple stock and holds them, creating an open position. The position remains open until the trader sells the shares.

Key points

• Refers to an active trade or investment that has not yet been closed.

• Exposes the trader or investor to market risk until the position is settled.

• Can be long (buying) or short (selling) and is monitored for potential profits or losses.

Quick Answers to Curious Questions

Open positions are subject to market fluctuations, exposing traders to the risk of losses if prices move unfavorably.

Traders close positions when they believe they have maximized profit or need to limit potential losses.

High volatility can lead to significant gains or losses in open positions, requiring traders to monitor them closely.

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