Short Sale In Stocks
Who here is also doing Short Sales in stocks? Can someone help me understand them and how it works?
[addsig]
Who here is also doing Short Sales in stocks? Can someone help me understand them and how it works?
[addsig]
A short sale in stocks has nothing to do with a short sale in real estate.
In the equities markets a short occurs when you borrow someone else's shares to sell, and then purchase them at a later time (hopefully lower). It's buying low and selling high, but in the reverse order of a long position.
Note: not all securities are shortable. There have to be enough shares floating around to be able to borrow the ones you want to short. Also most brokers require you to be on margin, and most require that the stock price is above $5.
Selling short can be a part of a sophisticated investment strategy in stocks but keep in mind you are borrowing the stock from your broker and he can "call"them back in at anytime which might not be when you want to sell.For most people selling short represents legal gambling. George