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.
- 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.
- 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.
- 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.
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.
- 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.
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).
