What is short selling, a short, or a short position?

in investments •  3 years ago 

"In basic terms, short selling involves counting on a stock price dropping."
https://www.cnbc.com/2021/01/29/short-selling-what-it-is-why-its-risky-and-how-a-squeeze-happens.html

"Short selling is an investment or trading strategy that speculates on the decline in a stock or other security's price. It is an advanced strategy that should only be undertaken by experienced traders and investors."
https://www.investopedia.com/terms/s/shortselling.asp

"A short, or a short position, is created when a trader sells a security first with the intention of repurchasing it or covering it later at a lower price. A trader may decide to short a security when she believes that the price of that security is likely to decrease in the near future. There are two types of short positions: naked and covered. A naked short is when a trader sells a security without having possession of it."
https://www.investopedia.com/terms/s/short.asp

"Shorting stock is a popular trading technique for investors with a lot of experience, including hedge fund managers. It can create large profits. But it also involves the potential to lose a lot of money.

Shorting stock, also known as "short selling," involves the sale of stock that the seller does not own or has taken on loan from a broker.1 Investors who short stock must be willing to take on the risk that their gamble might not work."
https://www.thebalance.com/the-basics-of-shorting-stock-356327

"Selling short is primarily designed for short-term opportunities in stocks or other investments that you expect to decline in price.

The primary risk of shorting a stock is that it will actually increase in value, resulting in a loss. The potential price appreciation of a stock is theoretically unlimited and, therefore, there is no limit to the potential loss of a short position.

In addition, shorting involves margin. This can lead to the possibility that a short seller will be subject to a margin call in the event the security price moves higher. A margin call would require a short seller to deposit additional funds into the account to supplement the original margin balance.

It is important to recognize that, in some cases, the SEC places restrictions on who can sell short, which securities can be shorted, and the manner in which those securities can be sold short."
https://www.fidelity.com/viewpoints/active-investor/selling-short

"Shorting a stock means opening a position by borrowing shares that you don't own and then selling them to another investor. Shorting, or selling short, is a bearish stock position -- in other words, you might short a stock if you feel strongly that its share price was going to decline.

Short-selling allows investors to profit from stocks or other securities when they go down in value."
https://www.fool.com/investing/how-to-invest/stocks/shorting-a-stock-meaning/

Authors get paid when people like you upvote their post.
If you enjoyed what you read here, create your account today and start earning FREE STEEM!