Trading has a language of its own. If you're starting out long , short , bullish and bearish are trading terms you'll hear frequently. These words are important for effectively communicating with other traders , and for describing market opinion. Understanding these terms also means you're potentially on your way to making money whether the price of an asset rises or falls.
Long is like "buy. If you're already long, then you bought the stock and now own it. In trading, you buy or go long something if you believe its value will increase. This way, you can sell it for a higher value than you paid and reap a profit. Bull or Bullish Bulls attacks upwards, representing buyers and those who believe a price will rise. Getty Images If being long or buying are actions related to a belief that an asset will rise in value, then being bullish is the belief.
To say "I'm bullish gold " means that I believe the price of gold will rise. Someone who's bullish may actually go long the assets they're bullish in, or they may simply have an opinion that the price will rise, but not actually make a trade based on that opinion. The term "bull" or "bullish" comes from the bull, who strikes upwards with its horns, thus pushing prices higher. Bullish, bull, and long are used interchangeably.
For example, instead of saying "I am long" a trader may simply say "I am bullish". Both statements indicate this person believes prices will rise.
Traders can also sell at a high price and buy back at a lower price. Being short, or shorting , is when you sell first in the hopes of being able to buy the asset back at a lower price later. This is a strange concept for many people to grasp, but in the financial markets you can buy then sell, or sell then buy.
If you've done the latter, then you're short the asset. In the futures and forex market you can short any time you wish. In the stock market there are more restrictions on what stocks can be shorted and when. When you hear someone say they are shorting something, it means they believe the price will go down.
Bear or Bearish Bears attacks downwards, representing sellers and those who believe a price will fall. Getty Images Being bearish is the belief that the price of an asset will fall. A person with this belief may choose to act on it or not. If the trader does act, they may sell shares they currently own, or they may go short.
To say "I'm bearish on stocks" means I believe the price of stocks will decline in value. Acting on a bearish or bullish opinion should only be done based on a well defined and tested trading strategy. Updated November 14, Long, Short, Bullish and Bearish Every trader should understand these terms since they're used frequently in financial news, trading articles and in the papers.
Long, short, bullish and bearish are terms used in all markets and on all time frames, regardless of whether you're day trading or investing, or trading soybeans or currencies.More...