Trading Terms

Beginner

In this video and complementary article, we are looking at some basic trading term used in financial markets trading.

 

  • Buy and Sell
  • Long and Short
  • Bull and Bear/ Bullish and Bearish
  • Risk On and Risk Off

Buy and Sell/ Long and Short

  • As a trader, if we think a market or asset is going to go UP in price, we would BUY.
  • If this BUY is done to enter a new open position, this is called going LONG.

go long

 

  • As a trader, if we think a market or asset is going to go DOWN in price, we would SELL.
  • If this SELL is done to enter a new open position, this is called going SHORT.

go short

  • If we have already SOLD and are SHORT a market, then if we BUY we are COVERING A SHORT, to then have a neutral position.

buy cover

  • If we have already BOUGHT and are LONG a market, then if we SELL we are COVERING A LONG, to then have a neutral position.

sell cover

Bull and Bear/ Bullish and Bearish

 

  • If as a trader or investor we believe that a market is going to rise in price we are described as a BULL, as being BULLISH.

bull

  • If as a trader or investor we believe that a market is going to fall in price we are describes as a BEAR, as being BEARISH.

bear

Risk On and Risk Off

 

Risk On

  • A scenario whereby there is a positive outlook for the economy in question (or the global economy).
  • Traders and investors are willing to take more risk, they have a healthier, higher risk appetite.
  • Traders and investors tend to BUY, go LONG of more risky assets (like equities, which are stocks and shares).
  • Traders and investors tend to SELL, go SHORT of less risky assets or safe havens (like Government Bonds).

 

Risk Off

  • A scenario whereby there is a negative outlook for the economy in question (or the global economy).
  • Traders and investors are LESS willing to take risk, they have lower risk appetite.
  • Traders and investors tend to SELL, go SHORT of more risky assets (like equities, which are stocks and shares).
  • Traders and investors tend to BUY, go LONG of less risky assets or safe havens (like Government Bonds).

 

Steve Miley

Editor in chief

Steve Miley has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Market Chartist, the Editor-in...continued

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