Financial Markets Book Financial Markets For The Rest Of Us
An Easy Guide To Money, Bonds, Futures, Stocks, Options, And Mutual Funds
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by Robert Hashemian

Page 140

shares of Ford stock, at which point you would be neutral with regards to your 20 shares. Long and short positions describe your account with respect to your stock holdings without regards of profit or loss. This concept becomes important when we cover shorting stocks. Just remember, long means buying and short means selling. You can think of long and short in terms of positive and negative with respect to each stock you trade.

In a regular account (cash or margin) there are four types of orders you can place. They are:

  • Buy- You place an order to buy a certain number of shares of a certain stock. Once the order is executed, you are notified and the shares are yours.
  • Sell- You place an order to sell a certain number of shares of a certain stock you had previously bought. You can sell part or all of your shares and once the order is executed, the proceeds are deposited into your account. Selling stocks in effect settles your long positions.
  • Short - You place an order to sell certain number of shares you don't have.Why would one want to short? And how could you sell stocks you don't already have? Shorting stocks is a tricky business.We will cover that next.
  • Buy To Cover - You place an order to buy a certain number of shares to settle your short position.We will also cover that next.

There you have it: four types of orders. The buy and sell orders are pretty straightforward and I am sure you have that figured out. When you buy a number of shares, you are betting that the price of those shares will increase over time. For example, you may buy 20 shares of Ford at $50 per share in the hopes of profiting when the Ford stock moves higher. You may buy these shares using cash or margin, and you

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Copyright and Disclaimer
Book Chapters
Table of Contents Copyright and Disclaimer Foreword Money
Bonds Futures Stocks Options
Mutual Funds Retirement Final Words Appendix A

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