Flip

DEFINITION of 'Flip'

A point when traders shift from having more long positions to having more short positions, or vice versa. A flip can be described as a situation when a trader decides that their outlook or strategy is no longer a winning one, and begins to take steps to reverse their positions. This may involve selling long equity positions in favor of short positions, or through the use of derivative instruments.

BREAKING DOWN 'Flip'

This can be a very effective tool for determining the trend of a certain currency. A shift from long to short positions indicates that the market's bullish outlook on a specific currency could be coming to an end. Another such example could be the market for crude oil, which has been known to be a very volatile trade, with traders often "flipping" positions numerous times over the course of a contract.