Making Sense of Trading Terms

Special languages, codes, handshakes are all around us and sometimes you get so deep into them, you don’t realise when you show signs of belonging to a certain group. Trading is no different, and terms like bullish, bearish, long, and short are ones you’ll come across frequently. You may work out the meanings yourself, but you can never be too sure, so here’s a quick guide.

Bullish/Bull

Like bearish, this is a term which may raise eyebrows, but there is a reason for this term – we’ll get around to that later.

Bullish is simply the belief that the asset’s price will rise, so when a market is said to be bullish or a bull market it is on an uptrend.

Now, where the name comes from. When a bull attacks, it strikes upwards with its horns, hence it being used to mean increases. Dripping with an undeniable “boy’s club” type of masculinity which makes it hard to wonder if it’s a result of the industry just poking fun of itself.

Bearish/Bear

The animal theme continues here, but it’s not Bear vs Shark, more Bear vs Bull. Whilst the bull drives you upwards, the bear strikes you back down with lows.

To be bearish is to believe that the value of stocks will decline. So, a bear market means prices are on a downtrend.

Long

Long is simple, it’s essentially to buy. If someone says they’re “Going long on xxxxx stocks” for example, they’re buying them.

Short/Shorting

The fundamentals of trading dictate to buy low and sell high. Just as traders have instances where they sell high and buy them back at lower prices, often so they can own a higher number of units than previously held. In turn this leads to greater potential profits.

In the context given, you’re selling to buy, selling to buy more – you’re short selling, shorting the asset.



Leave a Reply