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Long – A long trade is buying shares with the intention to sell at a higher price in the future and realise a profit .
Long unwinding – The sale of a share after it has reached the desired target and exiting is long unwinding .
Short-A short trade is initiated by selling first with the expectation to buy back at a lower price and make a profit.
Short covering- This is buying shares in the market to replace the already sold shares when the short position was initiated .
Buying of shares with the intention to sell it the same day or in a few days or a week or month when the desired profit is achieved. After buying the shares and holding it for a substantial time and then selling when it hits the desired profits is called long unwinding. A trade when made by selling first when the markets are down without even having the shares is short. After giving the sell order and buy it before the end of the same day before the market closes is called short covering.
Long– when one expect the price to go up, BULLISH, UPWARD TREND, Long position is taken. buyer thinks how to make money out of this expectation.
Buy stock now–> hold it for some time–>sell it latter
Long unwinding– when the stocks are progressing bullish and reaches the maximum peak, now the BULLS start squaring off <span style=”color: #393939; font-family: arial; text-align: justify;”> </span>their positions,<span style=”font-family: Georgia, Utopia, ‘Palatino Linotype’, Palatino, serif;”>When this happens open interest starts to fall accompanied by a fall in prices because there will be a lot of sellers in the market so the buyers will demand lower prices. This is called long unwinding when open interest is falling along with a fall in prices. A long unwinding tells us that the upward trend in prices has started to end.</span>
Short- when the price is expected to go down, BEARISH,DOWNWARD TREND, Short position is taken.
I sell the stock by taking short position now–>hold for some time until the price goes down–>as the price goes down further i buy the stock
<b style=”font-family: Georgia, Utopia, ‘Palatino Linotype’, Palatino, serif;”>Short buildup: </b><span style=”font-family: Georgia, Utopia, ‘Palatino Linotype’, Palatino, serif;”>Short buildup happens when the market is in general bearish about the stock. So new contracts are being entered into (open interest increasing) at lower and lower prices. This trend when there is an increase in open interest accompanied by a fall in prices is called short buildup. A short buildup confirms a downward trend in prices and that the trend is likely to continue.</span><br style=”font-family: Georgia, Utopia, ‘Palatino Linotype’, Palatino, serif;” /><br style=”font-family: Georgia, Utopia, ‘Palatino Linotype’, Palatino, serif;” />
<b style=”font-family: Georgia, Utopia, ‘Palatino Linotype’, Palatino, serif;”>Short covering: </b><span style=”font-family: Georgia, Utopia, ‘Palatino Linotype’, Palatino, serif;”>So after a while, the bears decide to take some profits so they start covering their short positions. When this happens open interest starts reducing accompanied by an increase in prices because there will a lot of buyers in the market so the sellers will now demand higher prices. This is called short covering when open interest is decreasing along with an increase in prices. Short covering tells us that the price fall trend has started to end.</span>Short-When one expect the price to go down the short position is taken
When a person analysis the stock price to go up, he creates long position by placing bur order. When the target is reached, he creates a position of long unwinding by placing sell order.
When a person analysis the stock price to go down, he creates a short position by placing sell order. A one sell shares even if he doesn’t have shares in his hand but he has to settle the trade on the same day. He has to buy the shares on the same day by creating short covering position.
To buy now and sell later for a profit, we create a long position at buy time & when we sell it’s referred to as long unwinding
However, if we wish to make money during a downward movement of a stock, we sell first to buy later – Intra day sell first is Short Position & buy before end of day is short covering. If this is done with beyond a day’s timeframe, it’s done in futures.
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