Hi everyone!
In the stock market, the trading size of sell should be smaller than the trading size of buy. So, the sell orders are called of “short postion” and the buy orders of “long position”. This is a rule for the stock market.
So, this rule, long position for buy and short position for sell, should be applied in forex and in other markets too?
Thanks!
Incorrect. For any given transaction the sell size and the buy size must be exactly the same.
So, the sell orders are called of “short postion” and the buy orders of “long position”. This is a rule for the stock market.
Again, incorrect. In stocks you are only short something when you have sold stock you didn’t own in the first place. If you sell a stock you’d previously bought you aren’t shorting. You’re just selling.
Incorrect. Multiple smaller orders can make up few bigger one. So like for example, more buyers can buy up one large sell order, or one buyer can buy up more small sell orders.
Oh yeah!
I forgot to question this before of doubt above:
Exist twos types of selling:
One, it’s when I sold something that I haven’t, in this case, this selling is called “short selling”, correct?
Another, it’s when I sold something that I have, in this case, this selling is called simply of “selling”, correct? Or, by inverse analogy, COULD (theoretically), be called of “long sell”, it’s not true?
So, by analogy, now I question the following: If exist two types of sell, so exist two types of buy too?
What would be the inverse of “short sell”? Something like “short buy”, I don’t know… ???
Incorrect. Multiple smaller orders can make up few bigger one. So like for example, more buyers can buy up one large sell order, or one buyer can buy up more small sell orders.[/QUOTE]
Correcet or incorrect!?!?!?
The question was not how many buyers/sellers. The question was volume (size). Yes, one buyers can buy up the sell orders of multiple sellers - or vice versa.
My point was that for any given transaction - or set of transactions - the sell volume must match the buy volume. Doesn’t matter how you slice it up or combine it, if someone buys 1000 shares then someone or multiple someones must be selling 1000 shares.
When you buy it is called Long, when you sell it is called short.
YES! YES! Because in stock market, when I buy, the worse that can happens is the active fall 99% and I loose 99% of my capital. But, in sell position, the worse that can happens is the active grow up 1000%, or more, and I loose more than my invested capital! Because this, the sell positions are “short positions”.
Correct!?
So, in stock markets, the value of the active varies from zero to infinite, but, in currency markets, the value of an active can varies from 0.001 to 1,000, in exponential scale. This is the reason for my question: the concepts of short and long position should be applied in forex too?
Do you understand my question now?
Other thing, in this page ( Option (finance) - Wikipedia ) there is two types of buy and sell. Short Sell, Long Sell, Short Buy and Long buy. I read this article, but I didn’t understand anything. How can I understand what’s a short buy and long sell?
The principle is the same across markets. The difference is that in the stock market there’s ownership. In retail forex there isn’t. The more correct thing is to say that a long benefits from appreciation of the base currency, while a short benefits from a depreciation of the base currency.
This article is specifically about options. With an option you are not buying or selling the product now, you are buying or selling the [U]right [/U]or the [U]option [/U]to deal in the product at a certain price at a certain time in the future.
This means you can [I][U]buy[/U][/I] an option to buy a product (a call option) or you can [I][U]buy[/U][/I] an option to sell the product (a put option). In either case you pay a premium for the option to exercise your right to buy or sell later.
But you can also [I][U]sell[/U][/I] options to either buy or sell the product in the future. In either case you are collecting the premium paid by the option buyer. These are very dangerous if you do not know what you are doing! Your only income is the premium, which you keep if the option expires worthless, but you are also obliged to pay the full value of the product if it expires “in the money”. (the value of the premium also fluctuates during the life of the option according to price movement).
So you can buy a call (option to buy - long position) or you can buy a put (option to sell - short position)
Or you can sell a call (option to buy - short position) or you can sell a put (option to sell - long position)
Options (especially selling) are extremely complex instruments and require great care in analysing your true exposure at any one time - and how your exposure will change if the market moves significantly.