HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
XM information and reviews
XM
86%
NordFX information and reviews
NordFX
86%

Taking Advantage on A Bearish Market


Shorting a stock has been popular and widely accepted investment strategy in past years. It had become increasingly globally known when Bill Ackman and David Einhorn, two of the most remarkable names in the investment industry, pulled off major bets against the biggest companies in the stock market, which triggered investors’ interest in short selling. 

Rising in Lows 


Shorting a stock, or commonly known as short-selling, is a technique of investors in which they sell the shares they do not own. A broker, or a third party, makes it possible by buying the stock and lending it to investors. The borrower will return the stock when its price falls down to profit from the difference in its original price or will have to buy the stock at a higher price at a loss if price goes up. 

Traders have found a great way to rise in lows by making extra money even from a falling market. By shorting a stock, they are able to speculate on stock prices or use it for the less risky hedging purposes. 

Speculation, meanwhile, entails higher risks given the short time frame of the trade because most speculators only hold their selling position in a span of weeks to few months. But when the company’s shares sustain its declining price, it adds more value to your portfolio. 

If shares prices go up after shorting a stock, investors may not worry as they can place a buying order and return the stock to the lender or the broker, closing the short position. 

Shorting a stock can also use to protect your investment portfolio through hedging. Normally, investors with long positions capitalize on short selling to protect their stocks. This less riskier strategy does not aim to gain any profit but only to safeguard other investments. 

Hedging is like investing in an insurance for your property, such as your car or house. You can utilize, for example, a derivative contract (like futures) in the stock index to pull off short positions in times of downward movement from your long position on blue chip stocks. 

Shorting a stock gives relief to investors in times of bearish market. While it allows traders to speculate or hedge, this activity also has its downsides and restrictions. For instance, you can lose more than 100% of your money if prices sustain an upward trend. Additionally, short selling is not possible if stock owners are not willing to lend.

#source


RELATED

Forex Trading: A Comprehensive Guide

In the realm of global finance, several markets and assets beckon traders. Among these, the Forex market stands out, offering unique opportunities and challenges...

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...

Dealing With Volatility: What Is VIX Index?

Volatility is a great factor when it comes to trading and the market. Hence, market indicators were developed to help traders quantify the volatility expectations of the market...

How to Construct a Mechanical Forex Trading System

As forex software becomes more complex and automation becomes more common, many traders now rely on mechanical forex trading systems...

NFP trading: understanding the effects of the Nonfarm Payroll

Professional traders often consider economic announcements as a reliable indicator of coming price action, and one of the biggest reports that capture traders' attention is the NFP...

Choosing a trading instrument: how to trade cryptocurrency

The capitalization of the cryptocurrency market is estimated at trillions of dollars and is only increasing every year. Cryptocurrency has come a long way from...

Cardano: What Price Will the Peer-Reviewed Crypto Reach?

Cardano was late to the crypto market compared to many others, but the altcoin crypto asset is brimming with innovation, giving it incredible projected...

5 ways to get your strategy copied

Copy trading is one of the popular ways that allow professional traders to earn additional income on their trading by offering investors to...

Five Bitcoin Day Trading Setups to Help You Make Money

Bitcoin trading has become big business in recent years as people have realised that the new and emerging market place is one that has the potential...

PAMM Account: Recovery Factor

One of the most important indicators of the reliability of the trading system used in the PAMM-account is the recovery factor. It is this factor that investors...

Stocks CFDs That Could Get a Boost on Black Friday

As the busiest shopping season of the year approaches, consumers are getting ready to open their wallets and swipe their cards away. However, this season is not only...

Investing vs trading cryptocurrency: What's right for you?

People often mistake investing and trading for the same thing. However, they are very different and each has its own characteristics when it comes to crypto...

When is the best time to buy Bitcoin?

Should you buy Bitcoin at $20k or wait for an even bigger drop? There are many arguments in favor of not postponing the purchase of the flagship crypto...

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...

Delving into the Webs of Influence: Dissecting the Role of Past Performances in Sculpting Future Achievements

In the continuously evolving sphere of human endeavors, the relentless quest to decipher whether the footprints of past performances imprint on the sands of future successes remains a focal fascination among scholars, analysts, and industrial protagonists...

What Is Spoofing in Crypto Trading?

Spoofing is a way to attempt to manipulate the market in your favor. If you spend any time trading, you will eventually hear the term “spoofing.” Spoofing is illegal...

The Measurements to Take When Investing in Ethereum

Ethereum is among the top 10 digital currencies on the cryptocurrency market, according to market cap. As of April 2019, the market price of Ethereum was $152 per unit...

Key Tips for Trading in a Fluctuating Market

Have you ever observed nature? Many things, such as the trajectory of a bee, may seem random. At the same time, they are not - there is nothing random in nature...

Ethereum: Will ETH Break Above $2000?

The recent spike in the crypto prices has coincided with the strongest period for the cryptocurrency and blockchain market since the end of 2018. Since December 2020...

Trust Management vs PAMM

In the many countries, the banking sector was, and still remains, the most common investment segment. The share of bank deposits in an...

Vantage information and reviews
Vantage
85%
FP Markets information and reviews
FP Markets
81%
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.