Now, we get into an area where some folks have a problem.

We all understand a Long Trading position because it uses the logic we are used to – buying an asset.  In stock trading, this is termed a Long Trade.  It means you open a trade by purchasing the asset, whether a stock or cryptocurrency.  But there is another way to open a position.  It is called a Short Trading position.  It is very common to experienced traders but causes angst to those less familiar with trading.

In a short trading position, you sell to open.  This means that you sell a stock that you don’t currently own.  The mechanism is this.  When you open a Short trading position, you borrow shares of stock from your brokerage.  (This is why you must have a margin-type trading account at your brokerage to do a short trade.)  Then, when you close the trade, you pay back the stock to the brokerage, and if it has lost value, you pocket the difference as your gain.  You only start a Short trading position when you are convinced the stock will lose value.

So why would we want to Short a stock?  Well, let’s say that we see many stocks going down.  The news is terrible, and we believe a stock we want to trade will surely go down.  If we check the next-day market prediction from our NeuralMatic Predictor, which predicts the stock symbol will be losing value shortly, it only makes sense to open a trade Short.

Trading in both long and short directions means that we can profit in any market environment.