No trade open, nothing at stake:flat is a position too, make no mistake.
Having no open positions in the market.
A trader who has closed all trades is said to be flat or square.
In plain words
A trader is flat when no position is open: nothing has been bought and nothing has been sold short. The value of the account no longer changes with the market. The word square means the same.
See it move
Long and Short are in balance
Why it matters
Being flat is a state in its own right: no exposure, no margin in use and no overnight financing. Some traders choose to be flat over events whose outcome they do not want exposure to.
Worked example
An example only. The figures are round and invented for the arithmetic: they are not market prices.
A trader is long 0.50 lots of a pair and short 0.20 lots of the same pair, and then closes both (invented figures).
- 1Net position before = 0.50 − 0.20 = 0.30 lots long
- 2Net position after closing both = 0 lots
- 3Used margin = 0, so equity equals balance
With nothing open the trader is flat, and the balance stops moving with the price.
A common mistake
Flat is also used of a market that is moving sideways, which is a different meaning. A trader can be flat in a fast market, and a market can be flat while a trader holds a position.
Check yourself
Educational information, not investment advice or a recommendation to trade.