Closed Position

In investment, a closed position is an investment which is not exposed to the market. Typically, an investment position is closed when its underlying assets (securities, commodities, currency, goods) are sold.

Example: You pay 5000 Swiss francs for 1000 kilograms of premium coffee beans. From the moment you pay for the coffee beans, your investment is exposed to fluctuations in the value of premium coffee beans.

If waning demand or a glut in supply causes the value of coffee beans to decline to 3 francs per kilo, you may be forced to sell your stock for just 3000 francs.

On the other hand, if coffee prices rise, you may make a profit by selling your stock at a higher price. Once you sell the coffee beans, the investment position is closed and your investment is no longer subject to fluctuations in the coffee to CHF market rates.

See also: Open position

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