The principle of short selling

short sell-The principle of short selling

1, short selling is not Required.

First, as an investor, not necessarily to do sell short. Most investors focus on long, short people are concerned about the less. Only a few good investments over his head the same time, short has not done very well. A bit like a baseball player in the right-hand man can be shot, which only a handful of players can do, like MICKEY MANTEL, but there is still strength left. Whether you want at the same time more than an empty investments are your personal choice.

2, the stock market fell more likely than the possibility of large increases.

Shares rose after the fall due to different reasons. The stock market there will be adjustments, bear, big crash, etc., but the market itself is often reflected the social science and technology, civilization and development of mankind as a whole trend is moved forward, there is no one can stop the law of history. Dow Jones index in a hundred years before 50 o'clock, after the great crash of 1929, followed by the Great Depression, the first and second world wars, eighties high inflation, the 911 terrorist attacks, etc., the index is still up to 10000 points. From the stock market as a whole sense, the success rate than long shorts to low.

3, the stock fell because of its own study rather than the sell-off caused.

To sell (stocks declining rapidly and is accompanied by a huge volume of transactions) often means the arrival of the bottom. Like the stock to do the first time a large number of inversion, can occur from an upward trend in the stock to decline. Throughout the downward trend in the middle stage, the stock decline is often accompanied by volume contraction. Fourth, to avoid the rolling empty. Short only as a short-term behavior, can not for long go on fighting. Investors can only move a short foot, was found to increase immediately buy back the stock short fill level. Because short-selling investors borrow shares to sell, if too short, that many investors borrow stocks short, once the stock market reversal, everyone admitted buying to cover short positions, or the borrower's side to require short sellers to cover short positions, supply and demand suddenly a major changes in stock prices to rise rapidly. Investors were buying short press and had a higher price back to stocks, the so-called short squeeze.

5, gravity also apply for the stock.

As an investor short than long should clearly alert investors because the stock drop faster than the speed of its rise, as the role of the Earth's attraction on the same stone, but time is often shorter.

6, may, by sex and the stock short uptick rule to increase their investment problems.

Short selling, also known as short selling, put those who borrow also. The first step is to short the stock broker is willing to loan to investors, so the transaction time is often an empty one-pay deal longer than that. Exchange of short selling are "uptick" rule of construction that shares all the way down, investors can not short, we must wait until the next rise (al l) to the next empty single. However, this condition is not limited ETF. Therefore, short selling is often not a good price.

7, in a confirmed rebound slightly downward trend in the face, to establish short positions.

Because by the above-mentioned conditions, in general, in establishing a downward trend in a small rebound, is the best opportunity to establish an empty head. Attempt in the stock strong, especially when the stock high, short selling is very dangerous, commonly known as shoot a tiger head.

8, using the previous experience.

For the short investors, there is a benefit that you can take full advantage of trading in shares of stock of the history to analyze. Because short-selling certain shares in the previous range of conduct, you can analyze previous high point, at the bottom, it is important moving average line and the trend line to select the reasonable goal.

9, short of covering the best in the Ruo Shi.

The rebound in the stock market decline is often very quickly, so investors should take advantage of weakness to buy back the profit-taking, can not wait until the stock market reversed most cover their short positions. 10, to avoid high dividend stocks. Try to avoid short-selling high-dividend stocks, because under the rules, short sellers have to pay dividends to the lenders.

Classification of short selling===>

About short selling===>

How to buy an empty transaction==>

Classification of short selling

Classification of short selling According to the different objectives of short sellers, short selling can be divided into three categories:

1) speculative short selling. In this case, the short sellers is expected to sell shares to the stock price fell due to lower prices again when added into the same stocks, the price gap between the two is the short sellers short-selling profits. This speculative short selling, risks and profits are greater. Speculative short-selling on the stock market have a greater impact because when the short sellers to sell shares, the stock will increase the supply, stock prices will follow down; has added, the stock market, increased demand and prices with the the rise.

2) Short selling for hedging. The fundamental purpose of this short is to avoid the stock market price drop due to losses.

3 ) A technical short-selling. This behavior is further divided into three kinds of short selling: The first one is based on all his stock-based short selling, which includes for the purpose of taxes in order to hedge against inflation for the purpose of and in the expected delivery for the purpose of, etc.; the second Arbitrage is for the purpose of short selling, which have different markets at different times of arbitrage and arbitrage; third is operated by a broker or securities dealer short selling, which not only the professional members, securities dealers, as well as investment banks and other financial institutions.

Because of the speculative short sale, a greater impact on the stock market, short sellers act obviously speculative, and therefore laws of all countries have a more detailed requirements of short selling in order to minimize the adverse effects of short selling, In some countries prohibit by law the form of short selling stocks.