In investment terminology and jargon, "long" often has nothing to do with the length of anything. This word is used primarily to indicate the opposite of a "short" position. When you see "long stock value" on your account statement or brokerage summary screen, you are looking at the current value of one or more of your stock investments.
Long stock value might best be understood by learning about selling stock short. A stock trader uses short selling to profit from a falling stock price. To sell short, the trader borrows the shares from his broker and uses a sell order to initiate the trade.
A short position is closed out by buying back the shares and returning them to the broker. So a short sale is the opposite of the typical stock investment; the short trade opens with a sell order and closes with a buy order. Any stock you bought to own and still have in your brokerage account is a long stock position.
If you don't practice the trading strategy of selling stock short, every investment you own is a long position. The long stock value listed on your brokerage account is the value of the stocks your own. In this case it does not matter whether you've owned the shares for a day or two or for many years; your stock ownership is all long stock value. To increase your long stock value, you want share prices to go up.
In contrast, the value of a short stock position becomes more valuable if the stock price declines. This is the basic difference between being long and short in the stock market. Most investors hold long positions and want their stocks to increase in value. A short trade is intended to profit from a falling stock price. To a certain degree selling short goes against the nature of stock investing, which is to buy stocks that an investor believes will increase in value.
The use of "long" and "short" to indicate the trader's expectations for a trade prevails across all types of trading securities. With some markets, such as options trading, there are profound differences between being long or short on the security. With others, such as futures trading, long and short function exactly the same outside of the directional difference.
The long and short of it is that long values are based on buying before selling, and short values come from selling before buying. Tim Plaehn has been writing financial, investment and trading articles and blogs since His work has appeared online at Seeking Alpha, Marketwatch.
Plaehn has a bachelor's degree in mathematics from the U. At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors.
This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. These returns cover a period from and were examined and attested by Baker Tilly, an independent accounting firm.
Visit performance for information about the performance numbers displayed above. Skip to main content. What Is a Hedge in the Stock Market? Authorized Startup Stock Options. Understanding Short Selling Long stock value might best be understood by learning about selling stock short. Long Stock Positions Any stock you bought to own and still have in your brokerage account is a long stock position.
Short To increase your long stock value, you want share prices to go up. Other Types of Investments The use of "long" and "short" to indicate the trader's expectations for a trade prevails across all types of trading securities. Long Position Business Dictionary: About the Author Tim Plaehn has been writing financial, investment and trading articles and blogs since Zacks Research is Reported On:More...