Long, short, flat and scaling: the words for your position
What long, short and flat mean, why shorting futures is easy, position size, fills and round turns, scaling in and out, averaging down, break-even and flattening.
Traders talk fast: "I'm long two, scaled out of one, flat by the open." If that sounded like a foreign language, this article is for you. These are the words for what your position is doing, and a few habits hiding behind them that decide whether you last.
Long, short and flat
- Long: you bought first and make money if price goes up. "I'm long 2 MES" means you own two contracts.
- Short: you sold first and make money if price goes down. You buy back later to close.
- Flat: no open position. Prop firms often require you to be flat before a certain time, and being flat is also a perfectly good position.
In stocks, shorting means borrowing shares first. In futures there's nothing to borrow: selling a contract you don't have is exactly as easy as buying one, and it's treated the same way. That's one reason futures traders short much more often than stock traders.
Long or short isn't a prediction you have to defend. It's just which side you're on until your stop or target says otherwise.
Position, size and contracts
Your position is what you currently hold: the side and the number of contracts. Size is how many contracts you trade. In futures you trade whole contracts, so size goes 1, 2, 3, never 1.5. When you need a smaller step, you switch to micro contracts, which are a tenth of the size. More in ES vs NQ vs micros.
Entry, exit, fill and round turn
- Entry: the order that opens your position. Exit: the order that closes it.
- Fill: an order that actually got executed, at a fill price. A partial fill means only some of your contracts were executed.
- Side: each buy or sell is one side. Opening and closing one contract is two sides.
- Round turn (or round trip): a full open and close of one contract. Commissions are often quoted per side, so check whether a price is per side or per round turn before comparing brokers.
Scaling in and scaling out
Scaling in means adding contracts to a trade in pieces instead of all at once. Scaling out means closing it in pieces: for example, taking 1 of 3 contracts off at the first target and letting the rest run.
Scaling out can lock in some profit and calm your nerves, but it also shrinks your winners. Scaling in on a winning trade, carefully, is how some traders press good trades. Both are fine if they're in your plan. Neither is fine if you invent it mid-trade.
Averaging down
Averaging down is adding to a losing position to get a better average price. It makes the trade look less bad and makes the risk much worse: your position grows exactly when you're wrong. It's one of the fastest ways to blow a prop account, because the max loss limit doesn't care about your average price.
Break-even, stopped out and flattening
- Break-even: moving your stop to your entry price, so the trade can't turn into a loss (apart from fees and slippage).
- Stopped out: your stop loss was hit and closed the trade.
- Flatten: close every open position and cancel working orders, usually with one button. Know where that button is before you need it.
Bulls and bears
A bull expects prices to rise and a bear expects them to fall. A bull market trends up and a bear market trends down. For a day trader the bigger question is often whether the market is trending at all, or just going sideways. That's covered in market structure: trend vs range.
In your journal
Log each trade's side and size, and tag the ones where you scaled in, scaled out or averaged down. After a month, compare their results with your normal trades. Many traders find their averaged-down trades are their biggest losers. Market Matrix lets you add your own tags, and Insights shows what each one costs or makes you.
This article is for education only and isn't financial advice. Trading futures involves substantial risk of loss.