Wall Street Strategies
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Frequently Asked Questions

Is raising the stop on a stock to cost the same as selling at the market?
When you put an order in to exit a stock, you can use a pre-set price or simply sell at the market. When we issue initial swing or trading ideas, we suggest everyone has a pre-set price on the downside to close the position to protect from higher losses. In a scenario where the stock moves higher from our original entry, it is wise to adjust that pre-set sell point (also known as a stop loss) to protect gains. This technique is designed to protect profits and allow traders to ride their winners even higher. This is also needed as it cuts out the emotional aspect of investing and particularly actively trading the stock market.

Investing Terms

Options
Options are contracts that give holders the right to purchase or sell an underlying instrument (mostly stocks) at a pre-ordained price (strike price) within a certain time frame (expiration). Call means that you have the right to buy the instrument at a specific price. Put means you have the right to sell the instrument at a specific price.

Long and Short
Long: In most cases, "Long" means that there is an ownership of underlying assets or instruments, like a stock or a bond. The connotation is typically that you want the instrument to move higher in value, although you can be long in instruments that represent bets to the downside for individual stocks, sectors or the broad market.

Short: In most cases, a "Short" is a bet that the underlying stock or instrument will lose value. Shorting a stock means borrowing shares at a certain price, let’s say $50.00, and selling them into the market hoping to buy them back later at a lower price, let’s say $25.00. In the process, the difference shows up as a profit.

XYZ shorted at $50.00
XYZ covered at $25.00
Profit on short $25.00 per share shorted


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