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Vector2112

02/27/17 9:26 PM

#31585 RE: qweisackey #31584




What is a 'Short (or Short Position)'

A short, or short position, is a directional trading or investment strategy where the investor sells shares of borrowed stock in the open market. The expectation of the investor is that the price of the stock will decrease over time, at which point the he will purchase the shares in the open market and return the shares to the broker which he borrowed them from.


BREAKING DOWN 'Short (or Short Position)'
While getting into a short position is usually done with stocks, the same logic of the trade applies to other types of assets such as stock options, exchange-traded funds (ETFs), commodities and currencies. Short-selling puts the investor into a position of unlimited risk and a capped reward. For example, if an investor enters into a short position on a stock trading at $20, the most he can gain is $20 less fees, while the most he can lose is infinite since the stock can technically increase in price forever. Short-selling is one strategy to use if you believe the price of the underlying asset will decrease in the future and you want to profit from that loss.

Look up Short Squeeze