Understanding direction: BUY / SELL, LONG / SHORT
Core Definitions
BUY and SELL
- BUY - Opening a position to profit from price increases
- SELL - Closing an existing position or opening a short position (context-dependent)
LONG and SHORT
- LONG - Owning an asset with expectation it will appreciate
- SHORT - Borrowing to sell an asset with expectation it will depreciate
Key Differences
| Term | Position Action | Market View | Profit When |
|---|---|---|---|
| BUY | Opening transaction | Bullish | Price rises |
| SELL | Closing or opening short | Bearish | Price falls (if shorting) |
| LONG | Owning the asset | Bullish | Price rises |
| SHORT | Borrowing to sell | Bearish | Price falls |
How QuantWave Uses These Terms
In Forecasts
- BUY - LONG: Recommended long position (expecting price increase)
- SELL - SHORT: Recommended short position (expecting price decrease)
- SELL (alone): Exit signal for existing long position
Practical Examples
Scenario 1: "BUY - LONG AAPL $150 Target $165"
- Action: Open long position at $150
- Goal: Profit as price rises to $165
Scenario 2: "SELL - SHORT TSLA $180 Target $160"
- Action: Open short position at $180
- Goal: Profit as price falls to $160
Scenario 3: "SELL AAPL $170" (when holding long position)
- Action: Close existing long position at $170
- Goal: Realize profits
Important Considerations
Market Context Matters
- BUY/SELL can mean different things depending on existing positions
- LONG/SHORT always clearly indicate position type
Risk Differences
- Long positions: Risk limited to full investment
- Short positions: Theoretically unlimited risk (prices can rise indefinitely)
QuantWave's Approach
- Always specifies position type (LONG/SHORT) in forecasts
- Provides clear entry/exit points for each
- Includes risk parameters for both directions
Understanding these directional terms is crucial for proper execution of QuantWave forecasts. While BUY/SELL indicate trading actions, LONG/SHORT specify position types - together they provide complete trade instructions.