Long, Short, Bullish and Bearish: The Language of Trading

You don’t need to be an expert in the stocks and securities markets to know that trading tends to have a language of its own. If you’re just getting started with investments to build your chances of a successful financial future, then there are going to be terms you hear pretty frequently as you begin working on your portfolio. Some terms occur more commonly than others, and some are associated with particular methodologies, such as day trading strategies, for instance. The key to success is making sure that you know everything there is to know about the language in your industry, and what it means to your decisions regarding buying or selling.

Long or Short Trading

The first term you’ll come across is long, which might not have the meaning you’d think. Some people assume that going long means that you hold onto something for an extended period of time. However, the term actually means that you’re going to buy something. Going long on a trade means that you’re spending the cash to own something new. Alternatively, shorting or going short means that you sell something. However, there’s a big difference between just selling something and technically shorting a trade. When you use this strategy, it means that you sell something at a high price with the desire to buy it back at a lower price later.

Many financial markets permit traders to purchase an asset, then sell that item, or sell then buy. This means that you borrow the asset, sell it, and buy it back at a cheaper cost so that you can make a small profit. Obviously, this strategy has its risks, but it’s also a great way for some professionals to make some extra cash too. Obviously, you’ll also need to buy that item back if you borrow it, when the price goes up too.

Bulls and Bears

The other two terms you come across in many landscapes are associated with animals. When you’re being a bull, you’re buying items, believing that they’re going to raise in value. The idea is that you’re confident that something you’re investing in is going to have more worth in the future. Bullish stances can revolve around very specific opinions about a specific stock, or they may refer to an entire market. On the other hand, some people use the term bull market when an investment price is rising on a consistent uptrend. There’s an opposite version to the bull space called the bear market. This is the exact opposite from being bullish about something. You act in the belief that the price of something will begin to fall. This means that you might sell or avoid buying anything extra.

Knowing the difference between the two animals in the trading landscape makes it much easier to determine which stance you’re going to take with your portfolio. However, it does take time to fully build a strategy. The more you learn about the industry and the terms that experts use here, the easier it’s going to be to unlock new opportunities for success.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes