I have been trading for some time but still find these terms confusing. I understand that buy to open starts a position, but I am unsure about buy to close.
I clicked the wrong option in my trading app last week and ended up losing money. Can someone clarify the difference simply?
Think of it as borrowing. When you sell short, you need to buy those shares back later to return what you borrowed. That’s what buy to close means. A lot of mistakes happen when traders forget to check their positions first. I always review my portfolio before I make any moves. It only takes a moment and helps avoid costly errors.
When you buy to open, you’re starting a new trade and taking ownership of that position.
Buy to close is different - you already sold short and now want to exit. You’re buying back what you sold to close the trade.
Just know whether you have an open position before clicking anything.
Buy to open is how you start a position. Buy to close gets you out.
Buy to open = starting a new position. Buy to close = exiting a short position.
• Open = entering a trade
• Close = exiting a trade
Verify your positions before clicking.
Did this exact thing in my second month trading. Lost $240 because I hit buy to close instead of opening a new position.
Here’s how I think about it now: buy to open means you owe the market. Buy to close means you’re paying that debt back.
I always check my open positions first now. Simple habit that’s saved me from making the same expensive mistake again.