Buy - Going Long and Sell - Going Short in Stock Indices Trading
There are two trades that a trader can make when it comes to trading stock indices; a trader can either buy or a trader can either sell.
When a trader buys a stock index this is called going long
When a trader sells a stock index this is known as going short
A trader will buy a stock index if they think it is going to go up based on their analysis. When a trader buys at a particular level the stock index must move up for the trader to make a profit. This buy trade also known as going long is shown below.
For this buy long trade the trader will continue making a profit as long as the stock index being traded keeps moving up as shown above.
If a trader thinks that a particular stock index is going to move down, then trader will open a sell trade, the trader will then make a profit as long as the stock index continues to move down as shown below. This is known as going short.
For this trade the trader will continue to make a profit as long as this index continues moving downwards.
As a stock index trader you will have to use technical analysis to analyze which direction the market is likely to move and then once you determine the most likely direction you will either open a buy trade or sell trade.