OTHER GROUP COMPANIES
market

Why Short Selling Is Not For Small Investors

Stock markets tend to rise in value over time and that is why exact timing is very important as far as short selling is concerned. Retail investors would do well not to engage in short selling.

May 16, 2011 12:14 IST | India Infoline News Service

Short selling is a trading technique an investor uses to profit from the falling price of a stock. It is considered a very risky technique as it involves precise timing and because it goes against the overall direction of the market. Stock markets tend to rise in value over time and that is why exact timing is very important as far as short selling is concerned. Retail investors would do well not to engage in short selling.


Short selling: Suppose a trader wants to sell short 100 shares of a company because he thinks sales will fall and earnings decline. His broker then borrows the shares from another trader who owns them with the promise they will be returned later. The trader who has borrowed then sells those shares immediately at the current market price hoping that when the share price drops, he will cover his short position by buying back the shares following which his broker will return them to the lender. Read More...


 

Invest wise with Expert advice

FEATURED ARTICLE

BLOGS

Open Demat Account

Invest wise with Expert advice

By continuing, I accept the Terms & Conditions and agree to receive updates on Whatsapp