Glossary
Long position
Owning a security in expectation that its price will rise; the opposite of a short position.
A long position is ownership of an asset, or a contract that gains when the asset rises. Buying 100 shares of a stock makes you "long 100 shares." It is the default way people invest: you profit if the price goes up and lose if it goes down. The opposite, a short position, profits from a fall.
How the payoff works
For a plain stock purchase without borrowing, the worst case is that the stock goes to zero and you lose what you paid. The upside has no fixed limit. Dividends paid while you hold the shares add to the return.
Other ways to be long
"Long" describes exposure, not just share ownership. Buying a call option, holding a futures contract on the buy side, or owning a fund that tracks an index all create long exposure. Traders often describe an overall portfolio as net long when the value of its long positions exceeds its short positions. Leverage changes the risk: a long position bought on margin can lose more than the cash put in, and falling prices can trigger a margin call.
A long holding's tax treatment depends on how long you keep it: in the US, gains on assets held more than a year are taxed at lower long-term rates.