Buy - Going Short in Stock Indices Trading

There are two trades that a trader can make when it comes to trading Stock 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

Going Long

A trader 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 shown 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 as shown above.

Going Short

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