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You can buy long when you feel that the stock’s value will keep on growing in value. It would take more time to get a profit than if you chose to trade and sell something in the same day, but the potential for real gains could be greater because those gains could possibly be a little larger.
Meanwhile, you can sell short when you notice that the market is falling. You can sell shares at a higher price and then buy them back at a lower price. This is different from when the long-trade would require that you actually acquire the shares. You will learn a little more about the short selling process a little later on in this chapter.
Conventional wisdom suggests that you should buy long when the stock moves up and that you sell short when the stock moves down. However, as this chapter will show, there are many variables that go beyond just how the stock market is moving at any given time that should be factored into your decision for making the right move.
