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

1525 Long Leveraged ETF
Long Leveraged ETF A leveraged ETF’s price is designed to move in multiples of two, three or more times the price movement of its target index. The target index may be broad-based, like the S...

217 Long Call Image
Long Call A long call gives you the right to buy the underlying stock at strike price A. Calls may be used as an alternative to buying stock outright. You can profit if the stock rises, without taking on all...

1350 Buy Value Mutual Fund
Buy Value Mutual Fund Value mutual funds seek out stocks that the fund management considers undervalued by the marketplace – good bargains at current prices. Typically, this involves using fundamental analysis to examine...

More strategies...

All-Star Analysis

Fund of funds on 05/16/2011
a collective investment vehicle (hedge fund or mutual fund) that invests in other funds that may or may not be directly available to retail...

If I "buy to close" a short position, how can I be sure I will not be assigned? on 05/18/2011
  At the end of the day, the Options Clearing Corporation accumulates all option exercises. Prior to processing...

Limiting Downside Risk with Collars on 07/18/2016
Brian Overby walks through an example of how investors might use a collar option strategy to limit some of the downside risk in the market...

More analysis...

On-Demand Videos

Exploring Volatility Index Options

Trading volatility is an interesting way to expand your trading and move away from the comfort zone known by most...


Rookie's Corner: Technical Insight and Strategy Builder

Are you interested in automated technical analysis or creating your own strategy seeker? TradeKing offers two...


How to trade a hot-issue IPO at TradeKing

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


More videos...