Long vs Short Basics: how retail opens an account, buys stocks, and bets on a fall

This is supplement #6 of the Fund Strategy basics. It answers the questions every beginner asks: where do I actually buy a stock? Why do people say “short”? And can an ordinary person short at all?

1. Long: buy first, sell later, profit from a rise

Long = buy low, sell high; the gap is your profit. This is the most familiar play, and the vast majority of A-share retail investors only go long.

One-liner: bullish → buy, then sell higher.

Say you think a stock at ¥10 is undervalued, so you buy; when it rises to ¥13 you sell and pocket ¥3 per share. Your maximum loss is capped — in the worst case the company delists and you lose at most your principal.

💡 Long is fully compatible with the DCA, grid and high-dividend ideas from earlier chapters: DCA is “mechanical long”, grid is “long plus swing on top of the core position”.

2. Short: sell first, buy back later, profit from a fall

Short = borrow shares, sell them high, then buy them back low to return, keeping the difference.

The flow:

1. You judge a stock at ¥13 is “too expensive, it will fall”;
2. You borrow shares from your broker and sell them at ¥13, holding the cash;
3. The price really drops to ¥10, so you spend ¥10 to buy them back and return the loan;
4. You earn ¥3 per share (ignoring borrow interest and fees).

The biggest risk of shorting: the loss is theoretically “unlimited”. A stock price has no ceiling — if you sold borrowed shares at ¥13 and it runs to ¥30 or ¥50, you must buy back at the higher price, and the hole can be bottomless. Shorting is a pro game; retail investors should be very careful.

3. How does an ordinary person “buy long stocks”? Four steps

Most people get stuck at step one: where do you actually buy stocks? The answer is a brokerage account (a broker app) — not a bank, and not Alipay’s fund store (that sells funds, not individual stocks).

Step 1: Open an account

• Download a broker app (e.g. East Money, Huatai, CITIC, Guotai Junan);
• Prepare: your ID card + a bank savings card;
• Flow: register → upload ID → video verification (prove it’s you) → set a trading password → wait for approval (same day or next day).

Step 2: Bank-to-broker transfer

• Move money from your bank card into the securities cash account (called bank-securities transfer, instant);
• Only cash in that account can be used to buy stocks.

Step 3: Pick a stock + place an order

• Search the code or name (e.g. 600519 Kweichow Moutai, 510300 CSI 300 ETF);
• Two order types:
  • Limit order: you name a price; it fills only at that price (good when you’re not in a hurry and want it cheaper);
  • Market order: fills at the best current price immediately (good when urgent, but price may slip).

Step 4: Sell (T+1)

• A-share rule: stocks bought today can only be sold the next trading day (T+1);
• After selling, funds return to the cash account; transfer them back to your bank card (sale-day funds are “available but not withdrawable” until next day).

💡 Beginner tip: instead of individual stocks, start with broad-based ETFs (e.g. CSI 300 ETF 510300, CSI A500 ETF 563360). One lot (100 shares) is only a few hundred yuan — diversified, no single-stock landmine.

4. What real short-selling tools exist in A-shares?

Retail access to shorting is scarce, and every route has a high bar:

⚠️ Note: A-shares have no real “inverse ETF” for frictionless shorting; a normal account (no margin) can only go long. To short you must open a margin account, with a ¥500k barrier.

5. Long vs short at a glance

6. Practical advice for retail investors

1. Nail “long + DCA” first: weekly broad-based ETF DCA, add on undervaluation, trim on overvaluation — the most retail-friendly system;
2. Skip shorting: unlimited loss plus borrow interest — beginners lose nine of ten times;
3. Discipline unchanged: revisit earlier chapters — buy at 52-week high × 0.85, sell at × 0.97, never chase green candles.

⚠️ This article is a framework illustration, not any investment or trading advice. Markets carry risk; account opening and trading decisions need caution.