Trading on eToro is based on strategy and sentiment:
- An investor who believes that the price of an instrument will rise in value will open a BUY position.
- An investor who believes that the price of an instrument will fall in value will open a SELL position.
Opening a SELL position - also known as ‘short-selling’ or ‘going short’ - is therefore generally used either when markets are falling, or as a hedging tool. On the eToro platform, short selling is done using a Contract for Difference (CFD).
To open a SELL position, switch the toggle from BUY to SELL in the Open Trade window:
Like all trading platforms, prices on eToro have a spread, meaning the BUY and SELL prices are different (the BUY price is always higher). When you open a SELL trade, it opens at the SELL price. The position increases in value as the asset’s price goes down, or decreases in value as the asset’s price goes up. A SELL trade closes at the BUY price.
SELL trades appear in your portfolio like this:
It is important to note that each BUY or SELL position is a separate transaction. In other words, opening a SELL position on an instrument you are already trading will not close your BUY position. Each position is a unique investment.