Selling first to profit from a fall

Why do short trades especially need a stop loss?

Price can keep rising with no limit

Long and short | TradeLiga

Most people only think of buying low and selling high. Traders can also try to profit when prices fall. That's what long and short are about.
Going long means buying, hoping to sell higher later. Going short means selling first, hoping to buy back cheaper.
In 2026 gold traded at roughly US$4,000 to US$5,000 an ounce. Say you short gold at US$4,400 and buy back at US$4,300: you make US$100 an ounce. If it rises to US$4,500 instead, you lose US$100.
In forex you're always long one currency and short the other. Buy EUR/USD and you're long euros, short dollars. Sell it and it's the other way round.
Common mistake
Myth: a short is just a long in reverse, with the same risk. A share can only fall to zero, but a price can rise with no limit. So a short's loss has no ceiling: shorts need a stop loss.
Key takeaway
Long gains when price rises, short gains when it falls. Either way, decide where you'll get out before you get in.

Going short means... Selling first to profit from a fallA short sells first and buys back later. If the price has fallen, the difference is the profit.
Buying EUR/USD means you're... Long euro, short dollarYou buy the first currency in the pair and pay with the second. So you gain if the euro rises against the dollar.
Why do short trades especially need a stop loss? Price can keep rising with no limitA falling price stops at zero, but a rising one has no ceiling. A stop loss caps how much a short can cost you.
You short gold at US$4,400 and buy back at US$4,450. Result per ounce? -US$50A short gains when price falls. Here it rose by US$50 against you, so you lose US$50 an ounce.