What does 'buy' and'sell' mean in trading?

When you place a trade, you are either ‘buying’ or ‘selling’ a financial instrument. There are buyers and sellers in every market. Here we discuss how their relationship works, and how it influences the markets. What do ‘buy’ and ‘sell’ mean in trading? When you open a ‘buy’ position, you are essentially buying an asset from the market.

What is buying and selling in trading?

Buying and selling are related to both long and short positions. Buying and selling are the primary activities in trading, and understanding key concepts such as bid and ask prices, spreads, and order books is crucial to making informed decisions in the market.

What is a 'buy' and'sell' position?

When you open a ‘buy’ position, you are essentially buying an asset from the market. And when you close your position, you ‘sell’ it back to the market. Buyers – also known as bulls – believe an asset’s value is likely to rise. Sellers – or bears – generally think its value is set to fall.

What is the difference between buy and sell price?

The difference between the buy and sell price is known as the ‘spread’, which the provider takes to facilitate the position. What is a long position? A long position in traditional trading is when you buy an asset in the expectation its price will rise, so you can sell it later for a profit.