Fx buys sell, long short, and many other trading tools are ways activities in the market with beneficial intentions. To buy or to sell a commodity is literally what takes place in the market or any other market for that matter, the same applies to trading long or trading shortly. In the world of fx, these terms are not as simple as the way they are defined in the English language. They are fx jargons, so they have “forex definitions”; and that is what this article is focused on.
WHAT DOES IT MEAN TO TRADE LONG IN THE MARKET?
To trade long in the market means to buy a specific security and sell it off when the value of the security increases. When you buys a security in hopes to sell it off at a better price and make profits, that trader is said to have gone long, or to have a long position. This long position can be maintained until she sells it off, at which point she is said to have closed her long position. Also, just like the name implies, to trade long means to hold open a long position for quite a long time. Usually, when a trader goes long, she does so with no intention to sell off her security any time soon. This does not mean that she would not take up wonderful opportunities to sell the security at great prices; just that such opportunities take a time to develop, thus the long term nature of the trade.
How is it beneficial to trade long in the market? A lot of traders who are into long term trading have trading strategies with concentrations on long term benefits instead of short-term benefits. A long term trader can manage risks better, does not have to pay much for transaction costs, as well as enjoy the flexibility it offers to attend to other things.
Going long is synonymous with buying. In long term, the trader buys a security (open position) and waits for an opportunity to sell (close position).
WHAT DOES IT MEAN TO TRADE SHORT IN THE MARKET?
To trade short in the market means to sell borrowed securities in hopes that its value would decrease, at which point they can be bought back again. Here is the deal; a trader borrows from her broker, signs an agreement to return the borrowed in future with the due interests. When a trader does that, the trader is said to have opened a short position or to have gone shortly.
This form of trading is common for short term traders or day traders. There are some benefits a trader stands to get if she takes part in a short term trade; the capital requirement is low, the risks involved in this kind of trade are only feasible within the short time the trade lasts, and the trader gets to enjoy the use of fx orders to control the business trail.
In a market, to go short works hand in hand with selling. The trader sells the open position and waits for an opportunity to buy (close position).