What is the short market value?
Short market value is a term used to identify the total amount of any short sale associated with the investor's account when the business day is closed. This type of value is important because of how many brokers of the margin structure are responsible for its customers. Depending on the total short market value at the end of today's trading and the margin request, in order to be introduced in the account, some restrictions may be set on the investor's account until these requirements are met.
The key to understanding the short market value is to grasp the concept of short sales. Short sales basically include lending some investment, such as security or futures contract from a broker and selling for a certain period of time. Within the process, the investor must buy an asset at some point and return it to brokerage. The investor has the advantages of accepting any revenues generated between the time when the asset is borrowed and sold, and when it is poured and returned to the broker. In the best caseThe investor borrows and sells the asset just before the value increases, holds it long enough to enjoy the benefits, and then buy the price of the asset.
In order to prevent the investor from carrying too much debt in terms of these borrowed securities, the brokers will monitor the amount of short sales that are made on the investor's account and determine the total number of short sales introduced at the end of the business day. Since he manages the loan using an account on a margin, brokerage wants to ensure that the total amount of these short sales does not exceed the limitation set on this account. If the total amount is outside the minimum and maximum ranges assigned to the Tradees accounts. This action control action of the current short market value helps protect the investor from exaggerated extension and also maintains the level of risk taken by the broker within reasonable limits.
MonitForting short market value is a task that occurs every trade day. Thanks to technological innovations, it is possible to quickly determine the amount of short sales currently related to a particular investor account and take any steps. Due to the nature of real -time monitoring, potential problems can be quickly identified, allowing the investor to solve and solve any problems before he has a chance to negatively affect the use of the margin account.