Hi, I was just wondering why people say go long when you need to buy or go short when you need to sell? What exactly is going long or short, is there a history behind this?
Not sure of the exact origin of long. I could imagine it being just a phrase, “going the length” with a stock.
I do now the origin of short. Or at least as it was told to me. Again, it’s from the idea that you’re selling something short. Meaning you have a low regard in it’s value. For instance if you sell yourself short, you aren’t living up to your potential.
In stock trading going “short” means selling something that you don’t own by borrowing it from someone else with the hope of buying it back later cheaper and pocketing the difference. Going “long” means buying the stock out right.
I am not sure that concept really applies to FOREX because you really are buying [I]and [/I]selling one side or the other with each transaction.
Haven’t a clue of the historical roots of the terms.
Actually, you never really buy or sell when trading forex. Technically speaking, in spot forex your positions are 2 day forwards. That means you are entering in an agreement to exchange currencies in the future. You aren’t actually doing it in the present. The whole roll process is about offsetting your position (because you won’t be delivering) from “today” and re-opening “tomorrow”.
Buying and selling imply ownership. You never actually own any currency in spot trading, so that’s technically the wrong terminology. You go long and you go short (going long offsetting being short, and vice versa).
As for where the long/short terms originally came from, I don’t recall.