|Forum - Shadow Island
||All Nyse, Nasdaq, Amex and Otcbb, no pinks please.|
|From: 10x (Rep: 75)||Date: 03/04/2010 17:06|
|Forum: Shadow Island - Msg #35||Thread #672925524 (Rec: 0) |
|Afraid to Short?? For many new traders shorting a stock is a bit unnerving. |
If you only wait for long setups you will miss a lot of money making opportunities. Shorting
is no mystery. It is a huge advantage when a company recieves bad news of on days
when the market is falling.
You need a margin acc't to short stocks. Your other option is to use the short bias
etf's if you don't have a margin acc't or are just too uncomfortable with shorting.
In a nutshell, Lets say you heard some bad info. about a company. You are sure this news
will send the companies stock down and you wish you could make money on that move
just as when the companies stock went up, Well you can.
Shorting is the process of borrowing shares of the company you wish to short. Lets say
the stock price is 5.00 and you want to short 1,000 shares. You borrow the shares and
$5,000.00 is put in your acc't.
At some point, if you are correct, lets say the stock drops to 4.00 a share and you feel that
is as far as the drop will go. You merely Buy the shares at the 4.00 price which is
called Covering. So you buy to Cover in effect returning the shares but you were able
to buy them back on sale,
Your profit is $1,000.00 minus fees.
Shorting can be a dangerous game, as if you are wrong, there is no limit on how high a
stock could possibly rise and at some point you Have to buy the shares back.
Using ETF;s to short the market is a safer bet in my opinion because unlike the stock
a short bias etf if the market goes up endlessly would stop at 0.
I have started a Forum, SHADOW ISLAND. Feel free to stop by and read about news and info you won't get from the main stream media. We trade ETF;s Gold and silver miners and small caps including otcbb, nyse, nasdaq, amex, Under 10.00 per share. Rules not firm. This is still America and we believe in freedom of
speech. No cursing please. http://www.thelion.com/bin/forum.cgi?tf=shadow_island
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