Expert Chaslau Koniukh
  • Companies
  • Global investment
  • Investors
  • Terminology
  • Economy
  • Stock Market
  • World exchanges
  • Tech and Marketing
short and long position
Market terminology

Short and long position on the stock exchange and their application in trading activities

19.12.2021
2 min read

Short and long position on the stock exchange: the definition of strategies

The essence of the trader’s activity is to make a profit by selling more than buying. The short and long positions on the stock exchange are intended for this purpose. Conclusion of transactions using the first option is called bear transaction, and in the second case – bull transaction. In professional terminology they correspond to the characteristics of shorts and longs.
Longs implies the purchase of various assets, which will bring profit over a long period of time. In this case, the trader expects the market to grow and with it his profit. Simply put, he buys stocks, and when their price rises, he sells them.
Short, or short position characterizes the making of profit, provided that the market is falling. The trader sells the asset he took from the broker at a certain value. Over time, the stock becomes cheaper, he buys it again and returns it to the broker.
It should be noted that despite the names, short and long positions do not affect the duration of the transaction. The latter can be executed for any period of time. Traders who specialize in longs are called bulls, comparing the rise in market prices to raising the horns of an animal in front of an opponent. Shorts are associated with bears, who pawn their enemies from the top down – as the stock rises in price.Short and long positions can be used in conjunction, such a strategy is called a boxing technique. In this case, the same amount of securities is taken simultaneously in the short and long. For example, the trader predicts the decline of the stock, he sells long and remains short. However, his assumption turns out to be incorrect, and the stock does not decrease in price. Then the trader buys back the long position. After a while the price of the asset sinks and he sells the short, thereby compensating for the costs and generating income. This strategy is prohibited on most major exchanges, so its use is quite risky for a broker.
It should be noted that short positions also have their own risks. It is possible to make a good profit only if the stock drops drastically, and only experienced traders are able to predict that. The mass use of the bearish strategy causes imbalance in the financial markets, and the shorts are often restricted.
The long position also has its own peculiarities. In some cases, you can make a profit after a long period of time, and when certain factors combine, you may never get any money. However, if used correctly, both shorts and longs can bring a large profit. The trader can in some cases, play to the downside, and in others – to the up. The main thing is to calculate everything correctly.

Tags: Market terminology
0
Previous Post The Baltic states are stalling the signing of national plans Next Post Finam analysts: why the investment attractiveness of the gold market is falling

You Might Also Like

KST indicator
Market terminology
Features of using the KST indicator for stock trading
10.07.2023
profit capitalization
Market terminology
Profit capitalization: features and functions
25.09.2020
Japanese candlesticks
Market terminology
Japanese candlesticks as a tool for a trader
27.12.2023
Anti-Martingale
Market terminology
Anti-Martingale strategy and its implementation in the Forex market
22.02.2021
interest rate strategy stocks
Market terminology
Interest rate strategy: a simple and effective way of trading
10.10.2024
Directional Movement Index
Market terminology
Directional Movement Index as an additional trading tool
14.01.2025

Popular Posts

  • Ingeborg Mootz: a woman who became a stock player at the age of 75
  • Li Ka Shing: How can success be achieved without money and education?
  • Skolkovo analysts: the Russian energy market is suffering losses
  • Businessman Chuck Feeney: the man who gave the world Duty Free

Editor's Picks

Chaslau Koniukh
Analytics

American bankers from JPMorgan and Goldman Sachs advise to invest in gold: review by Chaslau Koniukh.

Press Secretary
17.08.2020
Expert Chaslau Koniukh
Analytics

Chaslau Koniukh on the analysts’ opinion on the key stake size change soon

Press Secretary
18.06.2020
expert Chaslau Koniukh
Analytics

Chaslau Koniukh: Internet trade market in Russia may reach 2.78 trillion rubles.

Press Secretary
30.05.2020
Will the U.S. oil shale industry be able to quickly recover from the crisis: A Review by Chaslau Koniukh
Analytics

Will the U.S. oil shale industry be able to quickly recover from the crisis: A Review by Chaslau Koniukh

Press Secretary
16.05.2020

Popular Posts

  • Ingeborg Mootz: a woman who became a stock player at the age of 75
  • Li Ka Shing: How can success be achieved without money and education?
  • Skolkovo analysts: the Russian energy market is suffering losses
  • Businessman Chuck Feeney: the man who gave the world Duty Free
  • Analysts: Egypt’s economy to continue falling in 2023
Expert Chaslau Koniukh
  • Facebook
  • Twitter
  • Instagram

© 2024 CHASLAU KONIUKH. ALL RIGHTS RESERVED. Expert in marketing and project management, international investments, financial analyst.

Menu

  • Biography
  • Companies and corporations
  • Global investment
  • Investors and Entrepreneurs
  • Economy
  • Market terminology
  • Stock Market
  • World exchanges
  • Tech and Marketing
  • Analytics