Short selling - What is it?

[bluelabel]

Hello all,

just wondering what exactly short selling is? i dont quite understand it, if someone could please ellaborate in lamens terms that would be great.

also if this is posted somewhere else, please forgive me i did search, but no luck, just point me in the right direction if that is the case...

:bier:

blue

 

[AlterEgo]

Short selling is selling stock that you have borrowed from your broker in anticipation of the price falling so that you can buy it back at a lower price to repay your broker with. You keep the difference in price.

But they have banned this practice, for the time being anyway.

 

[bluelabel]

Short selling is selling stock that you have borrowed from your broker in anticipation of the price falling so that you can buy it back at a lower price to repay your broker with. You keep the difference in price.

But they have banned this practice, for the time being anyway.

Ahh, thankyou. I must say it sounded a lot more complicated than that. I can see how this could become a problem.

Thanks again,

:bier:

blue

 

[MattB]

...so that you can buy it back at a lower price to repay your broker with.

I've never shorted before, so still a bit cloudy on the concept -
So, you actually own the stock after you close a short position? ...so, those people that shorted BNB, say, from $2 -> $1 got $1 back per share... but are now stuck with a load of BNB at $1? Is that correct?

Or is it quite literally a 'loan' of the stock?

 

[Trembling Hand]

I've never shorted before, so still a bit cloudy on the concept -
So, you actually own the stock after you close a short position? ...so, those people that shorted BNB, say, from $2 -> $1 got $1 back per share... but are now stuck with a load of BNB at $1? Is that correct?

Or is it quite literally a 'loan' of the stock?

Nah thats wrong. You sell to open then buy to close. thats it, trade closed.

Think of it as three parties involved.

the long term holder you borrow the stocks off.

Then you sell to someone who buys it off you.

Then you at a latter time buy it back from them,

Then you give it back to the original long term holder.

trade closed you are now back in cash.

 

[shulink]

short selling could be very risky, as a stock might go up from $1 to $100, there is no up limit.

 

[diliff]

short selling could be very risky, as a stock might go up from $1 to $100, there is no up limit.

If only stocks did in this market

 

[shulink]

If only stocks did in this market

lol, yah that's true. most of the stocks are down now because of the financial crisis. Hope the market gets better soon.

 

[Sean K]

:couch

..

 

[Page]

Short selling is selling of stock which the seller does not own. he takes the stock from the broker and sales it in the market to make profit and in anticipation that the price of the stock will fall again and at that moment he is again going to purchase that share and return it to the broker from where he has taken the stock. If everything goes according to the plan the seller makes profit otherwise he has to bear loss................