What Is Selling Short is yet to be seen?
July 14th, 2009
Those who want to make some trade exhibitions can do short selling. Traders doing this transaction have gone beyond the boundaries of fear of losing. When you buy stocks with borrowed money you are already dealing with potential risks… the potential for greater profit and the potential for greater losses… which are yet to be seen. This is what is selling short simply tells you. In other words, in selling short an investor borrows shares, sells them and returns the same whether he has gained or lost. Imagine if he has gained from this transaction. Obviously he goes home with money in his pocket. But what if the transaction has failed? Naturally, he will go home broke and is obliged to pay whatever interest has been incurred for the loan. That is the meaning of risk!
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