Posted in Finance, Accounting and Economics Terms, Total Reads: 281
Definition: Weak Longs
It refers to an investor group who are ready to exit a position at the first sign of weakness. Such an investor group looks only at the upside of the investment and can’t bear nay downside risk. Trade positions are quickly closed when the investment doesn’t work out. Such type of investments are opposite of long-term investment as they try to avoid any volatility in prices as the motive is quick profit.
Mainly weak longs tend to be traders but not investors as the investment horizon is short term. For example, if most of the investors are weak longs, then any volatility in price will cause the weak longs to exit the position thus causing the prices to fall drastically.
Few techniques to improve from weak longs position is: trade smaller positions, place a stop loss order, book profits by selling half of the position, trading systems forcing people to leave positions.