I have been trading for a while but I keep seeing this term everywhere. Honestly, I am not fully sure what it means.
I saw it on my trading app yesterday and got confused. Is it just closing a position I already have open?
I probably should have learned this earlier but better late than never.
It closes your existing long positions. Here’s how the opposite actions work:
• Buy to open - starts a position
• Sell to close - exits your position
• Buy to close - exits a short
• Sell to open - starts a short
This terminology keeps you from making accidental trades.
When you buy a stock or option, selling it later is how you get your money back.
“Sell to close” indicates that you are exiting the specific trade you opened. If you skip this, the platform may think you are opening a new position instead.
Most trading apps use color coding for these buttons to help prevent mistakes.
Exactly right. Selling to close means you’re exiting a position you already own - it’s the opposite of buying to open something new. Most trading apps make this pretty clear, but beginners mix it up all the time. Just remember: you’re closing an existing trade, not starting fresh. Gets easier with practice.
That’s right. Sell to close means you are closing a position you already own.
I remember the first time I mistook that. I was eager to trade and thought I was opening a new position in GBP/USD, but I ended up closing my earlier trade instead. I lost out on a potential gain of about $250.
You close your current position with that. I’ve done it many times while trading.