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

Clearing activity in the market
Market terminology
What is a clearing activity in the market and its advantages
27.07.2020
Factoring and forfeiting
Market terminology
Factoring and forfeiting: business benefits
25.10.2020
a margin requirement
Market terminology
Margin requirements for the stock market: essence of the concept
07.07.2020
intraday trading
Market terminology
Intraday trading: basic approaches for trader activity
04.12.2020
secondary-public-offering
Market terminology
Secondary Public Offering or SPO: the difference between the procedure and IPO
20.10.2021
Straddle-2
Market terminology
Straddle: features of the option strategy
29.12.2021

Recent Posts

  • 1New home sales in the U.S.-1
    New home sales in the U.S. are falling: the reasons for the decline
    01.07.2022
  • 2billionaire John DeJoria
    John DeJoria: from a homeless man to a billionaire
    30.06.2022
  • 3DoorDash
    How DoorDash food delivery service succeeded in the U.S. market
    29.06.2022
  • 4Performance marketing-1
    What you need to know about performance marketing: its trends
    28.06.2022
  • 5Counterparty risk definition
    Counterparty risk: when it is important to measure its level
    27.06.2022

Popular Posts

  • Businessman Chuck Feeney: the man who gave the world Duty Free
  • Field of activity of the American Monsanto Company Corporation
  • Skolkovo analysts: the Russian energy market is suffering losses
  • Where can one obtain citizenship for investing in a country: overview of states?

Social media

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

Latest Posts

crypto industry has seen an increase in cybercrime
The Crypto industry records record growth in cybercrimes
02.07.2022
New home sales in the U.S.-1
New home sales in the U.S. are falling: the reasons for the decline
01.07.2022
billionaire John DeJoria
John DeJoria: from a homeless man to a billionaire
30.06.2022

Chaslau Koniukh

Expert Chaslau Koniukh

Chaslau Koniukh – an expert in marketing and project management, IT consulting, international investments, investor, financial analyst. A commodity trader, private consultant, entrepreneur, lecturer, author of several articles on the stock market.

Popular Posts

  • Businessman Chuck Feeney: the man who gave the world Duty Free
  • Field of activity of the American Monsanto Company Corporation
  • Skolkovo analysts: the Russian energy market is suffering losses
  • Where can one obtain citizenship for investing in a country: overview of states?
  • Alibaba Group: the secret of success from the founders of Aliexpress
Expert Chaslau Koniukh
  • Facebook
  • Twitter
  • Instagram
  • Biography

Chaslau Koniukh – an expert in marketing and project management, international investments, financial analyst.

Social media

Menu

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