short selling shares means

what is short selling shares ?

THE word itself suggest that something is short or the thing which you don't have from my past year experience i will tell actually what it is,the short selling of share means that you are selling the share of a scrip or company which you don't have or which you haven't bought yet but you are selling it to someone .

why you short a share because you feel that its price is more and it doesn't justify it you sell it but here comes turning point you have to have cover your shorts  weather its price has gone down or moved up(against your trade) you have to cover it.

if stock price is down you make profit suppose you short a share of 10$ and it price came down to 8$ then you profit in your trade of $2.(you bought at 8$ and settle trade)

if goes up suppose 13$ than your loss will be of  3$. but while shorting a share one has to keep a tight strict stop loss so as to minimize the loss.

for e.g if share price start shooting up my stop loss % must be decided suppose 5%is stop loss if share move above 10.5$ or 11$ i will purchase it to settle the trade,to minimize loss.

short selling shares means

every country has different rules for such trades margin requirement are also different 
every trade has an expiry period (the contract of selling and buying must be complete before expiry period).
 big institutional investor and big fund house perform these activity most but it is not suited for small retail trader and investor as they can incurred heavy loss in it and unwanted stress prevails their mind every time.


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