Stock Trading terminologies: “Long” and “Short”
The world of share trading is one that is filled with jargon. When one walks into a group of stock market traders, the conversation is usually filled with terms that make no sense to the uninitiated. So, if beginners and wannabe-traders ever hoped to learn a thing or two by playing audience to such discussions, it is a futile attempt as a basic understanding of the terminologies is highly vital. In the stock market in Pakistan, one may often hear terms such as “going long” or “going short” being used in the context of a trade. What do these word pairs mean? Breaking down terminologies: “Going Long” In share trading, “Long” is referred to the practice of purchasing a share that is increasing in value. Stock traders that run their predictions may usually “Go Long” on a share that has been predicted to rise in value. By going long, the trader waits for the share to increase in value for a specific duration of time and then he finally sells it off and makes a profit from it. Breaking down terminologies: “Going Short” Going short is the opposite of going long as in traders sell a position to make profits. When a trader remarks that He/ She is shorting a position, it means that the trader will sell a share that is currently going down in value and buy it back when the stock has reached a relatively lower price. By doing this, the trader makes a profit by buying back the same stock for a lower price and pockets the profit. Is going long or short confined only to the Stock market?