Buy and sell definition

Buy and sell are the two basic actions in trading. Buying opens or increases exposure to an instrument, while selling closes, reduces, or opens short exposure.

You buy when you expect an instrument to rise, or to close an existing short. You sell when you expect it to fall through a short, or to close a long. In a standard quote you buy at the ask price, also called the offer, and you sell at the bid price.

Buy and sell apply across forex, stocks, commodities, indices, crypto, futures, options, and CFDs. You pair them with position sizing, stop-loss levels, take-profit targets, and risk rules, so each order has a planned entry and exit rather than a guess.

Buy and sell Example

You believe EUR/USD will rise from 1.0850 to 1.0900. You place a buy order at 1.0850 to open the trade, then a sell order at 1.0900 to close it.

The buy opens the position and the sell exits it for a gain of:

1.0900 - 1.0850 = 0.0050, or 50 pips before costs or slippage