Buy and Sell
To buy is to acquire an asset or open a long position; to sell is to dispose of an asset you own or, in short selling, to sell one you have borrowed.
To buy is to take on an asset; to sell is to give it up. Traders buy to open a Long Position position or close a short one, and sell to close a long or open a Short Selling. Every buy is matched with someone else's sell.
- Category
- Trading Basics
- Reading time
- 3 min
- Also called
- Buying and selling, Going long and short, Opening and closing
- Updated
Buy and sell in plain words
A market order tells the broker to buy or sell straight away.1
Buyers and sellers pay different prices: a market buy usually fills near the ask, and a market sell near the bid.1
You can even sell first: short selling means selling shares you have borrowed rather than own.2 A brokerage account lets you trade many kinds of investments.3
How a simple buy or sell works
Choose the asset
Pick what you want to trade.
Pick a side
Buy if you expect a rise, sell if you own it or expect a fall.
Choose an order type
Use a limit order to set the worst price you will accept.1
Check the price
Buys fill near the ask and sells near the bid.1
Size the trade
Pick a hypothetical amount you can afford to lose.
Plan the exit
Decide when you would sell to close or buy back.
Worked examples
Example 1 — Buy then sell
GainA hypothetical trader buys 10 shares at 30 and later sells at 33.
| Buy | 30 |
| Sell | 33 |
| Result | +30 |
Both sides used market orders, which buy or sell a security immediately.1
Example 2 — Spread cost
Spread costA hypothetical stock shows a bid of 9.98 and an ask of 10.02.
| Buy fills | 10.02 |
| Instant sell | 9.98 |
Buys fill near the ask and sells near the bid, so an instant round trip loses the spread.1
Example 3 — Sell first
Short gainA hypothetical trader sells borrowed shares at 50 and buys them back at 47.
| Sell | 50 |
| Buy back | 47 |
| Result | +3 per share |
Selling shares you don't own is a short sale.2
Buy vs sell
| Aspect | Buy | Sell |
|---|---|---|
| Action | Take on the asset | Give up the asset |
| Price paid | Near the ask | Near the bid |
| Opens | A long | A short |
| Closes | A short | A long |
Where the terms appear
Orders
Placing a Market Order or Limit Order.
Positions
Opening a Long Position or Short Selling.
Spreads
Reading the Bid-Ask Spread.
Exits
Using a Stop Loss to sell.
Advantages and disadvantages
Advantages
- Simple two-sided idea.
- Works the same across markets.
- Selling short lets traders act on falls.
Disadvantages
- Each round trip pays the spread and fees.
- Market orders do not guarantee a price.
- Short selling can lose more than the stake.
- Rules on short selling differ by country.
Going deeper
Read as far as you need. Each level builds on the one before it.
Two prices
Beginner
A sell market order executes near the bid and a buy near the ask.1
Order choice
Intermediate
A limit order fills only at a specific price or better, while a market order trades immediately.1
Selling first
Advanced
Short selling means selling shares you don't own yet; the rules and borrowing costs vary by country and broker.2
Common mistakes
Forgetting the spread
Buys and sells use different prices.
Using market orders in thin markets
Fills can be poor.
Selling short without a plan
Losses can grow.
Mixing up buy to close
Know whether you open or close.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Buy takes on an asset; sell gives it up.
- Buys fill near the ask, sells near the bid.
- Market orders trade immediately.
- Limit orders set a price.
- Short selling means selling first.
Frequently asked questions
Is selling always closing?
Who is on the other side?
Do I pay fees both ways?
Further learning
- Market Order
Market orders.
- Limit Order
Limit orders.
- Bid-Ask Spread
Spreads.
- Short Selling
Short selling.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- U.S. SEC (Investor.gov). Types of Orders (opens in a new tab) Checked .
- Investor.gov (SEC). Short Sales (opens in a new tab) Checked .
- FINRA. Brokerage Accounts (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.