What is a Long Position?
A long position is the most fundamental trade in any stock market — you buy shares expecting the price to rise, then sell them later at a higher price to realize a profit.
Return % = (Exit Price − Entry Price) / Entry Price × 100
Going Long in NEPSE
In NEPSE, most retail investors operate exclusively through long positions — buying shares through their DEMAT account and broker. The process is straightforward:
- Identify a stock you believe will rise (using fundamental or technical analysis)
- Place a buy order through your NEPSE broker at your desired price
- Hold the position as it (ideally) appreciates in value
- Sell when your target price is reached or your stop-loss is triggered
You buy 100 shares of NABIL at NPR 1,000 each (total investment: NPR 100,000).
NABIL rises to NPR 1,200. You sell all 100 shares.
Gross Profit = (1,200 − 1,000) × 100 = NPR 20,000 (20% return)
After brokerage (0.4%) + SEBON fee + capital gains tax (7.5% on gains), net profit ≈ NPR 17,800.
Long Position Strategy: Swing Trading in NEPSE
Swing trading involves holding long positions for several days to several weeks, capturing intermediate price swings. This is the most common active trading approach in NEPSE because:
- NEPSE's T+3 settlement allows quick capital recycling
- Sector rotations create regular 2–4 week momentum cycles
- Quarter-end and fiscal year effects create predictable swing setups
Risk Management for Long Positions
Every long position should have a clearly defined stop-loss before entry. A common framework for NEPSE swing trades:
- Stop-Loss: Place 3–5% below entry, or below the most recent swing low
- Target: Minimum 2:1 reward-to-risk ratio (if you risk NPR 5, target NPR 10 profit)
- Position Size: Risk no more than 2% of total portfolio on any single trade
Example: Portfolio NPR 500,000 × 2% = NPR 10,000 max risk
Entry NPR 1,000, Stop NPR 950 → Risk per share = NPR 50
Max shares = 10,000 / 50 = 200 shares
What is a Short Position?
A short position is a trade where you profit from a falling price. In traditional short selling, you borrow shares, sell them at the current price, and later buy them back at a lower price — returning the borrowed shares and keeping the difference.
(Short profits when Exit Price < Entry Price)
Short Selling in Nepal's Market Context
It's important to note: traditional short selling (borrowing and selling shares) is not currently available in NEPSE for retail investors. Nepal's Securities Board (SEBON) has not yet approved a securities lending framework for standard short selling.
However, NEPSE traders can express a "short" view through:
- Selling existing holdings early — exit long positions before a predicted decline
- Avoiding new longs — staying in cash during bearish periods
- Derivatives (if available): Short positions may be possible through futures contracts as NEPSE's derivatives market develops
- Put options: If Nepal's options market develops, buying put options profits from price declines
How to Identify Short Opportunities in NEPSE
Even without direct short selling, identifying stocks about to decline helps you:
- Exit existing long positions before a major drop
- Avoid buying into stocks showing bearish signals
- Rotate capital from weakening sectors to stronger ones
Key bearish signals to watch for in NEPSE stocks:
- Bearish RSI divergence (price makes new high, RSI makes lower high)
- MACD death cross (MACD line crosses below signal line)
- Volume spike on down days (institutional distribution)
- Break below a major support level (multi-week or multi-month low)
- Sector underperformance vs NEPSE index for 3+ weeks
Long-Short Portfolio Strategy
Professional fund managers use a long-short equity strategy to generate returns regardless of market direction. They hold long positions in stocks expected to outperform and hedge with short positions in stocks expected to underperform. The net exposure (long % − short %) determines the portfolio's sensitivity to market direction.
Even for NEPSE retail investors, a simplified version is powerful:
- Bull market: Be 90–100% long in the strongest sectors and stocks
- Uncertain market: Reduce to 50–60% long, hold cash
- Bear market: Reduce to 10–20% long (only strongest stocks), hold cash or bonds
Common Mistakes in Long Positions
- No stop-loss: The most common mistake. "I'll sell if it drops 20%" becomes "I'll hold until it comes back" — often ending in catastrophic losses.
- Averaging down blindly: Buying more of a losing position without a reason — often accelerates losses. Only average down if your original thesis is intact and you have a higher-timeframe support level.
- Ignoring volume: A price rise on low volume is weak. Breakouts need volume confirmation to have follow-through in NEPSE.
- Holding through circuit breakers: If a NEPSE stock hits its circuit breaker limit multiple days in a row, the market is sending a strong signal — take action, don't hold and hope.
Know When to Go Long vs Stay Out
ASHVA Tech's AI signals tell you which NEPSE stocks are high-probability long setups today — and which ones to avoid.
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