Long vs Short trading

Long Vs Short

How money is made in trading?

When a buyer accepts the ask price or a seller accepts the bid price, a trade transaction happens. If buyers exceed sellers, they may be inclined to increase their bids to get the stock. As a result, sellers will charge higher prices for it, driving up the price.

If there are more sellers than buyers, sellers may be willing to accept lesser offers for the stock, while buyers may likewise drop their bids, ultimately pushing the price down.

Money is made two ways in trading:
  1. Going Long
  2. Going Short

GOING LONG

This is when you expect a stock to appreciate in value, meaning you will go long, also knowing as buying. To keep simple, going long or buying means you want the stock to go up (First buy low and then sell at high).

Long Position
Long Position

GOING SHORT

This means you are selling a stock also known as shorting. To keep things simple, shorting a currency pair means you want it to fall in value (First sell high and then buy at low).

Short Position
Short Position

Trading System

All successful traders use a trading system. A trading system prevent you to trade based on your emotion ( i.e fear, greed ). Components of a trading system that you should know as a trader before entering in the market :

Market What to trade (buy or sell)?
Entries When to trade (buy or sell)?
Stops When to get out of a losing position?
Exits When to get out of a winning position?
Position Sizing Quantity to trade (buy or sell)
Tactics How to buy or sell?

If you have a proper trading system, and you follow it with loyalty, then you will be profitable in long run. Don't look for a perfect trading system as it's doesn't exits.

The system will only help you survive the emotional struggles and as you know trading is the game of optimism, thrill, fear, greed, panic etc.

Keep in mind that a stop order does not ensure that it will be executed at or near the stop price. Always keep your eyes on open position
Recommended Topics
FOUNDATION

Common Vs Preferred Stocks

Businesses that want to raise money by selling stock can choose between two types: common and preferred stock ...

CANDLESTICKS

Top 7 Reversal Candlesticks

Candlesticks are used to identify trading patterns that help technical analysts in setting up trades ...

QUIZ

Economics || Stocks || Crypto || Derivative

Test your knowldege on finance, stock market and investment. Examine yourself with various questions related to the finance ...

BOOKS FOR TRADERS

Entrepreneurship || Business || Trading

20+ Best Books on businesses, trading, investing, personal finance and ...

NEWSLETTER
Buckle up for Monday
A weekly take on trading, finance, companies and other cool stuff...

Join over 27,000+ readers & receive an eclectic mix of topics covering Wall Street, global market updates and finance— delivered in a beautiful weekly email.
Multiple Choice Questions








Question x of y
>
Top 10 Business Books