Success Trading: Some Basic Terminology for New Traders

The world of trading can get very complex because the financial markets are complex. There thousands and thousands of successful traders out there today. The amazing thing is that they all have carved their own niches and approach the markets in a unique way. This should be wonderful news for beginning traders because it demonstrates that there are thousands and thousands of different ways to proper in the markets. It's just a matter of discipline and finding the approach that suits your style and personality. With all that being said, new traders must begin somewhere, so let examine some basic terms and approaches to the markets.

Going Long ? This means that you're betting on the instrument (stock, future, option, etc) to go up and that you want to buy. You purchase the financial instrument, watch it rise and then sell it for a profit. Profit are realized when you buy low and sell high. It's also known as taking a long position.

Going Short ? This means that you're betting on the instrument to go down and that you want to sell or take a "short position". A short position is closed out by buying those shares back or "covering" your position. This concept is very confusing to new traders because you're selling something that you don't even own. The thing is that you're still trying to buy low and sell high, you're just selling high first and buying low later. Think of it this way ? you go to a car dealer and order a new car, he charges you $20k and then looks to purchase it for a lower price. That dealer has taken a "short position" on the transaction between you and him. We don't recommend new traders to take short positions until they learn more about the market.

One thing to keep in mind about short and long positions is that they're totally different in nature. There are by far more traders out there taking long positions than those taking short ones. Human nature tells us that we buy with the expectation of rising prices. The concept of wanting prices to drop is against human nature and therefore short positions can be more erratic as a result.

Chuck Cox is a Technical Writer and Industrial Scientist by professional with a background in statistics. He has used mathematical and statistical methods to invest and trade in the stock, futures, and options markets. Chuck has owned various businesses and presently operates several websites. To learn more about trading the markets, visit his website, http://www.earncashathometoday.com/trad ing-stocks.htm

---

Hedge Fund 101 - Make Money with Hedge Funds

Investors are always looking for the best investments that will... Read More

Straddle Strategies in Option Trading

The straddle strategy is an option strategy that's based on... Read More

A Secret Revealed: Why Most (Day) Traders Fail

The following perspective on (day) trading comes from my many... Read More

Risk and Reward

If you are doing your own investing in the stock... Read More

It?s Never too Early to Start Investing!

Remember the old saying, "never too late to start"? Well,... Read More

Love The Thrill of Risk? Invest in an Annuity!

With the stock market in steep decline, people are looking... Read More

Critical Investors Business Daily Responsibilities - If not Followed Could Cost You Millions!

When thinking about the investors business daily responsibilities in today’s... Read More

25 Ways to Find Companies to Buy

When you start your program to purchase your "ideal" company,... Read More

Investing 101: Risk Terminology - BETA

About thirty years ago, statisticians armed with all of their... Read More

Bankers in Denial

Denial is a ubiquitous psychological defense mechanism. It involves the... Read More

The Basics of Tax-Free UK Financial Spread Betting

Financial Spread Betting (or Trading) offers a tax free method... Read More

Expand Your Pool of Investors for Your Company

If you own a company that sells complicated products and... Read More

Making Every Penny Count

More and more workers are leaving their jobs and taking... Read More

Getting Started Investing is Often the Hardest Part

There are several reasons people give for not investing their... Read More

When NOT to Invest

Unfortunately, many investors who are seduced by the lure of... Read More

Is Starting A Business For Me? What To Consider Before Starting A Business

Do you have the right temperament?Starting a small business is... Read More

Creating Momentum with Options - Pro and Cons of At-the-money, In-the-money, and Out-of-the-money

To create momentum in your options trading you need to... Read More

Stock Market Horizons: Gold $3,000, Oil $70

In the last two decades, even though gold prices have... Read More

Stock Market Retirement Investment Plan

For a successful retirement investment plan to work in the... Read More

Waiting 20 Years Can Cost You Millions - Dont Wait Start Today

Many Young people live for Today. They really don't fully... Read More

Use this Simple Trick its to Buy $100 Bills Direct from your Bank for only $97

Most People just don't understand the power of using their... Read More

Mutual Fund Selection Made Simple By Indexing!

Non-indexed mutual funds try to keep it secret that actively... Read More

Direcway & Wildblue Set to Square Off this Fall?

There is a cat fight brewing between Direcway LLC, Starband... Read More

Before You Start Investing

There maybe several reasons why you to want to invest... Read More

Retirement Plan Considerations Cheat Sheet for Small Business

RETIREMENT PLAN CONSIDERATIONS are something every small business person needs... Read More

Oil and Gasoline Price Uncertainties

The Light Crude Continuous Contract hit an all-time high at... Read More

The Economy Is Not The Stock Market

Several days ago, the Commerce Department reported that May's factory... Read More

Stock Market Leaders and Laggards

Leaders are stocks that breakout immediately when the market confirms... Read More

Investment Rowing

You have rowed a boat at some time haven't you?... Read More

The Biggest Oil Opportunity in the World ? And How You Can Profit From It

Where is the second biggest deposit of oil reserves in... Read More

Value Investing

By definition, value investing is the process of selecting stocks... Read More

Profitability And Stock Turn Rate

The inventory of the typical store represents the largest single... Read More

Moving Average Convergence Divergence ( MACD ) Charts

The Moving Average Convergence Divergence charts, or MACD charts for... Read More