The Long and Short of it.

Often you must have heard or read somewhere, "go long on share xyz" or "go short on share abc". I am sure like me even some of you must have wondered what these terms mean.

Well here is what my understanding is:

Going long is when you buy a share expecting it will go up over a certain period. So you will buy at price x and sell in future at y when y>x. So your profit is y-x.

Going short is when you sell a share(which you don't own!) expecting it will fall and then buy at a lower price. Say you sell at x and buy at y where y

There is risk associated with both methods. In case of long, if you buy a share and if it drops in value, you loose money. In case of short, you will loose money if the share price rises. Shorting a trade is for more experienced users due to the risk associated with it.

I am still naive in this area. So please feel free to correct me on anything I have mentioned above.

Raj