What is open position and closed position?

In the context of trading and investing, “open position” and “closed position” refer to the status of a trade or investment in a financial asset, such as stocks, forex, or commodities. These terms are used to describe whether a trade is currently active or has been completed:

1. Open Position:

• An open position is a trade that has been initiated but has not yet been closed. In other words, it’s a live or active trade where you still hold an exposure to a particular financial asset.
• For example, if you buy 100 shares of a company’s stock, you have an open long position until you decide to sell those shares, at which point the position will be closed.

1. Closed Position:

• A closed position is a trade that has been completed or terminated. It means that you have sold or bought back the asset you initially traded, effectively ending your involvement in that particular trade.
• For instance, if you initially sold short 50 shares of a stock and later bought back those 50 shares, you have closed your short position.

The key difference between the two is that an open position is an ongoing trade where you still have exposure to price movements, while a closed position is a trade that has been settled, and you no longer hold the asset in your portfolio. The motivation to close a position could be to realize a profit (take profit), cut losses (stop loss), or for various other strategic reasons based on a trader’s or investor’s objectives.