HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
Vantage information and reviews
Vantage
85%
XM information and reviews
XM
82%

Short selling as a way to profit


Short selling is a method of stock trading that allows investors to profit from an investment vehicle that is going down in value and that they do not own. To be able to short sell a stock, a trader needs to borrow the stock from someone who owns it (though the brokerage or investment firm) and sells it, hoping to repay the loan of the stock by buying the shares for a lower price in the future. Said another way, if the price goes down as the trader hope, they buy back the same asset, now at a lower price and pocket the difference as profit. While short selling comes with potentials risks, it can be a profitable way to trade.

How does short selling work?


Also known as shorting a stock, this approach to stock trading may seem counterintuitive, especially to typical long-term investors. Since stocks are known to go up over time (though of course there are corrections and small hiccups), many traders with a long horizon, buy assets with the expectation that they will hold onto them for a long time. It may be a good or not so good financial investment decision, as major corrections and timing issues, as well as the quality of the asset they invest in and potential political events, influence the “success” of the investment.

But shorting a stock might be a wise move for traders with a shorter trading perspective. How do you borrow a stock to short sell? This is how short selling works:

Is shorting stocks a good idea?


Short selling stocks can be useful for traders who have a particular trading strategy or have identified a certain security they believe will go down in price. Some people look for companies they think are poised to go down in value, perhaps the shares of companies that are mismanaged or are going through a rough spot, or recently had a large upswing in price. Many brokerage investment firms assist traders who want to short sell, finding the shares to borrow, loaning the money needed to borrow the stock, and arranging the entire procedure.

#source


RELATED

Scalping as a trading style

A wide selection of financial and analytical tools allows the trader to put into practice any trading ideas. Moreover, ready-made and effective trading strategies...

Understanding Buy and Sell Walls in Crypto Trading

The world of cryptocurrency trading is a dynamic and ever-evolving landscape. As investors and traders navigate this digital frontier, they encounter both promising opportunities and formidable obstacles...

Demystifying ECN and STP Trading: A Comprehensive Overview

When setting foot in the trading realm, the first, and perhaps most significant, decision lies in selecting the right broker. The trading platform you choose will serve as your constant ally...

What Factors Affect the Price of Cryptocurrencies?

Do you want to trade cryptocurrencies but need to know when it is better to sell or buy them? What happens to the prices in the crypto market, and what should you consider?

Slippage: How to Get Your Desirable Price

Slippage is a term that is used frequently in finance and applies to forex and stock markets. Slippage can bring you either loss or higher profit...

Forex trading sessions

Currencies are available to trade 24/5, anywhere globally, while cryptocurrency is available 24/7. However, there is server maintenance when trading cryptocurrencies...

Trading on the news: Pros and Cons

Most often, the most significant changes in the Forex market occur after the financial, economic and political news and the reaction of the market to them...

What is DeFi staking?

DeFi, or Decentralized Finance, refers to financial services that are – decentralized. That is, DeFi aims to bypass traditional financial channels and middlemen...

Maximizing Returns with USDT Staking: A Comprehensive Guide

In the dynamic world of cryptocurrency, staking has emerged as a popular way to earn passive income. Among the various digital currencies available for staking...

What are Interest Rates and How to Calculate Them?

Every country around the world strives to create the best economic conditions and provide financial security to their citizens. However, the unpredictable nature of the global...

How to stake Ethereum

Ethereum is switching into a proof-of-stake consensus to allow the network to achieve scalability. Ethereum staking is when people lock up Ether (ETH) for a given time...

How to Trade Stocks Online: A 5-step Process to Get You Started

Online stock trading can be confusing to the uninitiated, but newcomers looking to start their investment journey needn’t be put off. Here’s a 5-step guide to get you started...

How did investors survive the crises of past decades?

The world indexes have never fallen so quickly and strongly before. The financial crisis that has begun is unique for its trigger - it was caused by a virus COVID-19...

How to Invest in Facebook Stock with Libertex

Facebook is now a popular social media platform all over the world. Aside from that, Facebook, Inc. (NASDAQ: FB) is now one of the biggest companies...

A Guide to Trading Metals

Precious metals such as gold and silver have been recognised as valuable metals for a long time, but gold and silver are not the only ones out there for investors

What is an NFT?

It is fair to say that 2021 was the year of NFT, Ethereum’s enfant terrible. Non-fungible tokens invaded the world of digital currencies to become...

Secrets of trading in the Asian session

Practically every trader knows that the particular dynamics of the pricing of financial instruments depends not only on the selected asset, but also...

Security Tokens Versus Utility Tokens: Which Is Better?

The cryptocurrency industry is vast and diverse. There are DeFi tokens, non-fungible tokens (NFTs), Bitcoin, altcoins, and much more. The categories of crypto assets...

How to Make the Most of the Crypto Drop with Shorting?

The crypto market undergoes a clear negative trend that is expected to last for a while. Bitcoin has plummeted by 33% this week and reached the 18-month low...

The Modern Day Trader's Guide: Understanding Time Commitment and Strategies in 2024

As the curtain closes on 2023, with the S&P 500 signaling a moderate gain, the focus shifts to the landscape of day trading in 2024. Day trading, a practice where traders capitalize on intraday...

FP Markets information and reviews
FP Markets
81%
RoboForex information and reviews
RoboForex
77%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.