Buy - Going Short in Stock Indices Trade

There are two trade positions that a trader can make when it comes to trading Index; a trader can either buy or a trader can either sell.

When a trader buys a Indices this is called going long

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

Go Long

One will buy a Indices if they think it is going to go up based on their analysis. When a trader buys at a particular level the Indices must move up for the trader to make a profit. This buy trade also known as going long is illustrated and illustrated below.

For this buy long trade the trader will continue making a profit as long as the Indices being traded keeps moving up such as shown above.

Go Short

If a trader thinks that a particular Indices is going to move down, then trader will open a sell position, the Stock Index trader will then make a profit as long as the Indices continues to move down just as is illustrated below. This is known as going short.

For this trade the trader will continue to make a profit as long as this stock index continues moving downward.

As a trader you'll have to use technical analysis to analyze which direction the market is likely to move & then once you determine the most likely direction you will either open a buy trade or sell trade.

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