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For Newbies: Buy Long & Sell Short - Confusing Terms

okpinoy · 7 · 8033

okpinoy

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(Source: https://www.facebook.com/groups/FXFledgling/permalink/1269642259811335/)

Buy Long = Some people call it just "LONG". It means you are buying something. For Forex traders, it means you are buying a currency against another currency. In the physical/electronic transactions, it simply uses a portion of your fund to "BUY LONG" or "LONG" that currency with hope that will increase value against another currency... e.g. if you long EURUSD, it means you are buying EUR with hope that it will increase value against USD.

Sell Short = Some people call it just "SHORT". It means you are buying something. Do not be confused. You are not actually selling something here. You are still buying here. For Forex traders, it means you are buying the other currency against the main currency. In the physical/electronic transactions, it simply uses a portion of your fund to "SELL SHORT" or "SHORT" the other currency with hope that will increase value against the main currency... e.g. if you short EURUSD, it means you are buying USD with hope that it will increase value against EUR. If the quote price of EURUSD is decreasing it means USD value is increasing against EUR. Sell shorting is also used in stockmarket in many countries.

Actually sell shorting was used in stockmarket first even before forex trading was invented. It was done like a bet that a company would have a bad business and lose a lot of money. The first sell short was invented and transacted in the Netherlands in the 17th century by Isaac LeMaire to sabotage The Dutch East India Company and earn a lot of money while sabotaging it. The practice has evolved and became a common practice in the financial world, including in the Forex market. If you take a closer look at the whole history of "sell shorting", it is actually a tool for financial disaster if abused. As an example of it are; the Great Depression, and the Sub-prime Mortgage Crisis. If you happen to watch the movie "The Big Short", the story about the Sub-prime Mortgage Crisis, there's a lot of truth into it that made that industry bubbled. Three years ago, I spoke to a friend of mine that had a job in the U.S, wayback 2005. He said, it was easy to predict that it would happen bcoz people could easily get a housing loan without a background check and downpayment. Worse, real estate companies gave rebates of around $10k for each American that would take a housing loan. So when someone was broke, they took a housing loan to have an extra cash :( :( :( They could take a housing loan up to five times and they could refinance any existing housing loan that they had. Some say that what happened to the industry was intentional and plotted all along by some big people. I hope it's not true bcoz if there are really people like that, they can re-do that kind of disaster in the future.

Close = here is where the real selling takes place. When you "close" it means, you are selling the currency that you either "long" or "short" and putting back the money used for the transaction back to your actual fund.


lakshi

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Reply #1 on: Nov 27, 2018, 12:54 AM
I think you are using the combination in the wrong way. In Forex term, you don't say "Buy Long", you say enter a "long position". You don't say "Sell Short", you say enter a "Short Position".

It is either Buy & Sell or Long $ Short. You understand this?


okpinoy

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Reply #2 on: Nov 28, 2018, 09:16 AM
I respect your opinion :) You should tell that to MT4 (Metaquote)  :hihi:




okpinoy

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Reply #3 on: Nov 29, 2018, 05:17 AM
guys, any other terms that you can think of?


okpinoy

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Reply #4 on: Dec 05, 2018, 01:14 AM
i'm sure there are other terms use by other traders.


okpinoy

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Reply #5 on: May 17, 2019, 07:38 AM
Back in 2002, I remember that we don't use the term "Close" often.  I traded directly in the broker's office and every time we close a trade, we said: "Liquidate". Ah, those were the old days :)


okpinoy

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Reply #6 on: May 22, 2019, 10:20 AM
I also remember that back in the old days,  the terms "Buy Long" and "Sell Short" have been used already. I guess you can't train an old dog to do a new trick.


 


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