What is a short sale of investment?
Investment in short sales is the technician used by investors for profit when the market or specific stocks are experiencing a decline in stock prices. When the investor makes a short sale, he borrows security from the broker and then sells it. When the investor sells an investment, he is aware that he is buying security in the future so that they can return it to the intermediary they borrowed from.
For example, if the investor believes that the XYZ stock price will reduce, they may shorten some of these shares. The investor enters investment in short sales because they believe that the current stock price is too high or overpriced, so they believe it will fall in the near future. In this scenario, the investor would contact his broker or investment broker to maintain XYZ shares.
If their broker does not have shares, then this broker can borrow on behalf of the investor. Once the broker is borrowed from the broker, they immediately sell them. The investor receives the current market price of shares of shares, KTEré short. When and if the stock price drops, then the investor covers short when buying stocks at a lower price.
As soon as the investor buys back shares at a lower price, he will return the shares to the intermediary from which they originally lent shares. The investor benefits from short -term sales. Short sales profit is the difference in the amount they sold shares and the price they paid for the purchase of shares. Of course, the investor must also deduct any commission or expenditure for transactions before the real profit calculation.
However, the problem arises if the stock price increases rather. In a short sale of investing, when the stock price does not drop, but instead increases, the amount of money that the investor can lose is unlimited. As the price price increases, the investor must choose a point where they buy shares.
must buy shares of shares in order to return the shares to the brokers from which they borrowed in the first place. UpE losses depend on the place in which the investor buys shares. The more the stock price increases, the more loss for the investor involved in the short sales of investing.