Just like title says, a guy I know keeps saying that, whenever I take a position, say 100 shares long in AAPL, someone else goes short that position (like an institution/market maker, etc), is this true? He plays it as if getting into a position spells doom, gloom and slippage. My perspective is that of a real market: if I buy 100 shares I marginally increase the demand and slightly push the price up (in this case by probably a fraction of a fraction of a cent) Some insight would be great, thanks
The person on the other side of the trade could be either going short or selling shares he already owns -- there's no way for you to know. As far as buying increasing demand, that's not the case. If your buy order gets filled then demand (your portion of it, anyway) has decreased since it's been fulfilled. But the market is fluid with new supply and demand coming into it constantly, so considering the effects of one trade isn't useful.
The guy you know is a scared trader. He gets in and the market turns against him so he gets out and loses. If you were the only one trading then perhaps it would matter if an institution or market maker was taking the other side of your trade. But you are not the only one trading. Think about it. The only thing that matters is whether you are on the right side of the trade for the specific timeframe.
In stocks: Absolutely not. In AAPL's case, only 4.4% of the float is held short, so for over 95% of AAPL longs there is absolutely no one holding the 'other side', because there is no other side. In futures and options: For every contract held long, there's someone holding the other side short. You could say that in essence all futures and options contracts have '100% of the float held short', even though that's not the correct term for it.
There can be situations where more than 100% of the float is short. Hmnnn. so if you buy 100 shares someone went short 200.
One more thing: when you buy and you're hitting an offer, if the person whose offer you hit is a market maker, it's often likely that he's shorting the shares that you're buying. This isn't because he's necessarily bearish on the stock, but because he doesn't have a supply to sell to buyers. So he shorts, and then depending on the circumstances, he might decide to hold his position, or add to it as the stock goes up, or immediately close it and go long, or do something else, but he'll almost always end up flat at the end of the day. Maybe this is what the guy you know was trying to say.