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Long and Short

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Definition:

Financial trading uses some phrases that are unique, including the terms that describe whether a trade was entered by buying or selling:

Long

When a day trader is in a long trade, they have entered a trade by buying a contract (or group of shares, or forex lot), and are hoping that the price will go up. Day traders will often use the terms buy and long interchangeably. Similarly, some trading software will have a trade entry button marked "Buy", where another might have a trade entry button marked "Long". The term long is often used to describe an open position, as in "long the YM", which would indicate that a trader had an active trade where they had bought a contract of the YM (Dow Jones) futures market.

Short

When a day trader is in a short trade, they have entered a trade by selling a contract (or group of shares, or forex lot), and are hoping that the price will go down. Day traders will often use the terms sell and short interchangeably. Similarly, some trading software will have a trade entry button marked "Sell", where another might have a trade entry button marked "Short". The term short is often used to describe an open position, as in "short the ZG", which would indicate that a trader had an active trade where they had sold a contract of the ZG (gold 100 troy ounce) futures market.

Shorting or Selling Before Buying

Note that most financial markets allow shorting, which is the process of entering a trade by selling, and then exiting the trade by buying. Shorting (or selling short) allows professional traders to profit regardless of whether the market is moving up or down, which is why professional traders usually only care that the market is moving, not which direction it is moving.

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