In forex, a short position refers to the situation where a trader sells a currency pair in anticipation that its value will decrease, with the intent of buying it back later at a lower price to realize a profit. This is also known as “shorting” or “going short”.
For example, if a trader expects the value of the EUR/USD currency pair to decrease, they would sell the EUR/USD pair. If the value of the EUR/USD pair does indeed fall as expected, the trader can buy it back at the lower price and earn a profit. However, if the value of the EUR/USD pair increases instead, the trader will incur a loss.