What are 'Weak Longs'?

Weak longs are investors who hold a long position and are quick to exit that position at the first sign of weakness. This type of investor is typically trying to capture upside potential in a given security but is not willing to take much loss. These investors will quickly close their positions when a trade does not move in their favor.


Weak longs are often short-term traders rather than long-term investors because they are unwilling to hold their positions through market fluctuations. If a trade does not move in their favor, they will quickly close their positions and look elsewhere for opportunities. Most weak longs are momentum traders who are more interested in making a quick profit than investing in undervalued companies until they reach a fair value.

When weak longs close their position, it may present an opportunity for investors to buy into the dip and reduce their cost basis. The selling pressure that weak longs create when closing out their positions can lead to consolidation in a stock following a significant uptrend. This explains why stocks tend to top out after following an earnings announcement because these traders lock in their profits and move on to other investment opportunities.

The benefit of a weak long is that the investor can lock in profits immediately rather than succumbing to cognitive biases such as the disposition effect – or holding onto a losing stock for too long. The drawback is that weak longs tend to generate substantial churn in their portfolio and it can be harder to remain profitable over the long term compared to a strategy of long-term investing.

Example of Weak Longs

Suppose that a company announces favorable earnings for the quarter. Short-term traders may buy the stock at the open to capitalize on the run-up while long-term investors may add the stock to their existing positions. Weak longs will hold the stock until it begins to consolidate following an earnings run-up. At that point, they may sell the stock and move on to other opportunities. Long-term investors will continue holding the stock over the long term.

In addition, long-term investors may take advantage of the consolidation to add to their position and lower their cost basis. Long-term investors may wait on the sidelines following a positive earnings announcement and buy the stock after it begins to move lower and consolidate. This allows them to buy the stock at a lower price after the dust has settled and ultimately increase their long-term profit potential.


  1. Weak Shorts

    Weak shorts refer to traders or investors who hold a short position ...
  2. Long Term

    Long term refers to the extended period of time that an asset is ...
  3. Weak Currency

    A weak currency is one whose value has depreciated significantly ...
  4. Close Position

    Closing a position refers to a security transaction that is the ...
  5. Lock In Profits

    Locking in profits refers to the realization of previously unrealized ...
  6. Hold

    Hold is an analyst's recommendation to neither buy nor sell a ...
Related Articles
  1. Trading

    Three Stocks Starting Another Move Higher

    These stocks are in strong uptrends, and are starting to move higher again after a pullback/consolidation phase.
  2. Trading

    The Long Straddle And Price Consolidation

    With options, the direction of a stock's next major move becomes less important than its magnitude.
  3. Investing

    When to sell a stock

    Buying at the right price determines profit, but selling a stock at the right price locks it in.
  4. Trading

    Short-Term Breakouts Point to Higher Prices in These Stocks

    These stocks are all in uptrends and recently broke out of short-term consolidations, signaling another up wave.
  5. Trading

    The art of cutting your losses

    Taking corrective action before your losses worsen is always a good strategy. Find out how to keep your capital losses small and let your winners run.
  6. Trading

    3 Key Signs Of A Market Top

    Learn the best ways to foresee market corrections and how to profit from them.
  7. Trading

    Introduction to Momentum Trading

    This trading style offers profits due to the powerful ways in which momentum can drive a stock. Learn more today.
  8. Trading

    What Type Of Forex Trader Are You?

    Timing may be the key to uncovering your true strength as a forex trader.
  9. Managing Wealth

    Value Investing & Short Selling Are Like Oil & Water

    To be a good value investor, you need to find and buy bargain stocks but more importantly, you have to stick to the trade until the market recognizes the worth of these securities.
  1. What are common trading strategies used in a bull market?

    Discover four commonly used trading strategies by investors and analysts to make profits from a prolonged bull market, including ... Read Answer >>
  2. Can a stock lose all its value? How would this affect a long or short position?

    A stock can lose its entire value, but depending on the investor's position, this can be either good (short positions) or ... Read Answer >>
  3. Is the banking sector a good choice for value investing?

    Find out why the banking sector is attractive to value investors, who typically look to buy discounted stocks during times ... Read Answer >>
Trading Center