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

Protective Put Node 214
Protective Put Purchasing a protective put gives you the right to sell stock you already own at a specified price. Protective puts are handy when your outlook is bullish but you want...

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...

329 Long Index ETF
Long Index ETF An index exchange-traded fund is typically comprised of most or all of the stocks that make up a particular index, such as the Dow Jones Industrial Average, the S...

More strategies...

All-Star Analysis

Market breadth on 05/16/2011
with respect to technical analysis, it is an indicator of market sentiment. When the market is making an up or down move analysts consider...

3185 Covered Call as a Beginner Options Strategy qa on 01/05/2011

Options Strategy Scanner | Trading Tools on 07/29/2015
Find the right basic or advanced options strategy to meet your specific criteria.

More analysis...

On-Demand Videos

2233 Elliott Wave Trading Insights
Elliott Wave Trading Insights

Elliott Waves are a popular method of technical analysis that aims to forecast trends. This concept, developed by...

461 Seasonality Trends
Seasonality Trends

We have heard the strategies such as “Santa Claus Rally” many times before, but why do markets often start to move...

25342 Option Myths Revealed 154x116 image.png
Option Myths Revealed

Separating fact from fiction isn’t always as cut and dry as you might think. Sit in with Mark Sebastian for his...

More videos...