Buy - Going Long and Sell - Going Short in 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 Indices this is called going long

When a trader sells a Stock Indices this is known as going short

Going Long

A trader will buy a Stock Indices if they think it is going to go up based on their analysis. When a trader buys at a particular level the Stock Indices 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 Indices being traded keeps moving up as shown above.

Going Short

If a trader thinks that a particular Stock Indices is going to move down, then trader will open a sell trade, the trader will then make a profit as long as the Stock Indices 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 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.