Learn trading ideas & strategies from TradeKing's experts

Upcoming Live Events
More live events...
Learn it. Trade it.

Open your TradeKing account today!

Upcoming Live Events
More live events...

Differences with Buy and Long, or Sell and Short


You’ll notice sometimes an investor or trader may use the word “buy” while others use the word “long.” What’s the difference? It could be very little, or a lot, all at the same time.

Buying a stock (or an option) is straightforward. It’s the resulting position which might not be obvious. As you probably have heard, Wall Street is a unique place where you can sell things you don’t already own. This ability is what creates the nuance between “buy” and “long”. For example, say you buy 100 shares of Ginormo Industries, Inc. Then you decide to exit your position. So you sell your 100 shares. You were long 100 shares, then you closed your long position, getting rid of your shares.

Consider another example: you are short 100 shares of Ginormo Industries and then you buy 100 shares of the same stock. In effect, the two transactions balance each other out. After your buy order is filled, your short position is covered. In this case a buy order did not result in a position in your account. Herein lies the distinction between long and buy. “Long” not only conveys the action taken, but also current ownership, and therefore, it is much more descriptive than “buy”.

The same distinctions can apply to “selling” versus “short”. “Sell” refers to selling something you own. “Short” conveys selling something you don’t currently own, such as when selling a stock or option short. The term “short” also implies a liability exists. Think of this as similar to when you split the check at your favorite restaurant with your friend, but you are “short” five bucks. You may also see the term “write” to refer to selling something not owned, but this word is usually reserved for shorting options.

Start Trading Stocks for $4.95 per Trade

TradeKing offers great pricing - stock trades are only $4.95/trade! No minimum deposit required . Highly-rated customer service and free tools. Open an account today!






Related Strategies

414 Short Strangle Image
Short Strangle A short strangle gives you the obligation to buy the stock at strike price A and the obligation to sell the stock at strike price B if the options are assigned. You are...

398 Long Butterfly w/ Puts Image
Long Butterfly Spread with Puts A long put butterfly spread is a combination of a short put spread and a long put spread, with the spreads converging at strike B. Ideally, you want the puts with...

534 Buy Index Mutual Fund
Buy Index Mutual Funds An index mutual fund is typically comprised of most or all of the stocks that make up a particular index. The reason to own an index mutual fund is to take advantage of...

More strategies...

All-Star Analysis

Which account types are automatically deemed professional by the exchanges? on 05/19/2016
Certain legal entity accounts are automatically considered Professional. These account types include, but are not limited to, the following...

ETF Center | Trading Tools on 03/25/2013
Tap into the latest market activity in exchange-traded funds (ETFs), including most-actives, top performers and more.

404 Christmas Tree Butterfly w/ Calls Image on 12/16/2010

More analysis...

On-Demand Videos

How to trade a hot-issue IPO at TradeKing

IPOs offer potential profits as well as possible risk. Join Nicole Wachs as she explains...


Options Pricing Calculator Video Tutorial

Our Options Pricing Calculator makes researching a contract's...


Volatility: A Practical Talk

Join Dan Sheridan as he discusses implied volatility and the Greek Vega. After the discussion Dan applies the...


More videos...