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Understanding “Long” and “Short” Terms in Trading

October 12th, 2012

These terms are more efficient than terms like "buy" and "sell" because they tell your position--your mindset on a particular stock or on the industry.

Long

  • PositiveĀ on the market
  • You can also be "long" on a particular stock: If you are long Nike, you're expecting it to go up

Short

  • Negative on the market
  • You can also be "short" on a particular stock: If you are short Nike, you're expecting it to go down
  • Selling with the intention to buy the shares back at a lower price

Benefits of using "Long"/"Short" vs. "Buy"/"Sell"

  • If you have 1,000 shares of Nike and you tell someone you sold 500 shares, they could assume you think Nike is going to go down even though you are still positive 500 shares.
  • If you think a certain stock will go down and you decide to sell all 1,000 shares and later purchase 300 shares, and you tell someone that you bought the 300 shares, it is not clear that you are still negative 700 shares. They may not understand that you think Nike will go down.
  • "Long" and "short" remove the ambiguity associated with the terms "buy" and "sell."

Author: Sasha Evdakov

Sasha is the creator of the Tradersfly and Rise2Learn. He focuses on high-level education speaking at events, writing books, and publishing video courses on business development, internet marketing, finance, and personal growth.

I'm Sasha, an educational entrepreneur and a stock trader. In addition to running my own online businesses, I also enjoy trading stocks and helping the individual investor understand the stock market. Let me share with you some techniques & concepts that I used over the last 10+ years to give you that edge in the market. Learn More

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