Short Selling

RECENT NEWS
Samurai Trader  6 hrs ago 
I spend a lot of time at Starbucks, and frequently get the chance to skim through the New York Times (without paying for it. They just bumped the price from $1 to $2, an act which makes me question their sanity). When I find something of...
Blogging the Commodity Bull Market  Jun 25 
"Because they are printing money," he says...and believes that stocks could go to very high nominal levels, while the currency becomes worthless. I was just catching up on Rogers latest media appearances, and found this video on CNBC from a...
Jutia Group  Jun 23 
“Investors are worrying that a three-month surge in stocks might be overdone.” - So read a piece of market commentary from the Associated Press a few days, as the Dow, S&P 500 and Nasdaq all slumped. Thanks for the heads-up, guys. You’re...
Clusterstock  Jun 17 
Brief synopsis: a misguided government policy driven by fraudsters in the stock market is making the market less efficient at a cost to taxpayers of at least a billion dollars. This post has two start points – a start point for people...
Financial Times  Jun 16 
Talk of short-selling and acquisition possibilities knocks 1.7 per cent off Capita as market struggles to find direction
TheStreet.com  Jun 12 
Tim Sykes and James Altucher break down some big biotech names.
Bullish Bankers  Jun 11 
A month ago, when Netflix was trading at $39.60 a share (now just over $39), I initiated a short position on Netflix [[NFLX]]. The total amount shorted was for a 1/2 position out of a full position, accounting for about 15% of my portfolio. I...
UnBiasedTrading (TM)  Jun 10 
Oil has used the EIA data this morning as a way to push up a bit more, even since I was pulling these charts of USO to post. The hourly chart shows this at left, and you can see that there is no negative divergence in the StochRSI on this push...
Fund my Mutual Fund  Jun 10 
Due to this fact, I am increasing index shorts measurably for the first time in many weeks. Until/unless we get back over S&P 947 and can hold it, I'll maintain this for the short term at least. All shorting has been a fool's game but I'm a...
Stock Trading To Go  Jun 5 
Can't find shares to short a particular ETF? Try one of these three simple strategies to take that bearish position.
Suggest a News Source
Topic
Top news source/blog that we're missing
Why do you recommend this news source?
Close 
Thanks for your suggestion!
 
RELATED WIKI ARTICLES

Related Articles

 

Short selling is a method of profitting when stock prices fall.

Short selling and selling short are synonymous terms. The opposite transaction would be "buying long".

If you are "short" a stock, it means that you expect the price to go down. Short selling as a strategy has several inherent risks:

  1. In the long term, stock prices have generally gone up. So taking a short position is either a short-term bet against the market as a whole, or a bet against very specific companies.
  2. Margin interest. Because the first part of short selling is to sell the stock, it begs the question, "how can you sell what you don't own?". Simple, you borrow it (from your broker in this case). And because you are borrowing the stock and your broker is charging you interest until you return the shares, unless the stock is going down, margin interest charges will start gnawing down your cash. This aspect is another reason that selling short is usually done in a shorter term time frame. The closing transaction is "buy to cover."
  3. Unlimited liability. When you "buy long", your liability is capped. You can, at most, lose the value of your invesment (IE, if the stock costs $60 you can lose no more than $60). However, if you were to sell short and the stock price rose, there's no limit to the amount of money you could lose (as there is no theoretical upper limit on the stock price).

BEWARE: not all short or selling transactions are in anticipation of a downward move. If you short/sell a put option contract, that is typically a bullish to neutral prediction.

Short selling is controversial and is the subject of SEC proposals to restrict its use. A Wiki with links to the proposals and an opportunity to comment on them appears here.

 
Worried about pump and dump?
We review changes
for stock spam
Want to make Wikinvest better?
We need your help,
contribute today
Do you write software?
We are recruiting
the best engineers
Like Wikinvest?
Spread the word —
Tell your friends!
Wikinvest © 2006, 2007, 2008, 2009. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki