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03-10-2010, 10:03 PM
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#1 | | Captain Happy Bubble is my Homeboy
Join Date: Sep 2008 Location: Vancouver
Posts: 321
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| question on short selling
K i know how short selling works, you have someone to take your bet when you think a stock is going to fall.
but my question is who takes the bet? is it all through the stock market or do you go to firms asking if they take the bet.
thanks in advance
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03-10-2010, 10:39 PM
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#2 | | Orgasm Donor & Alatar owned my ass twice!
Join Date: Mar 2003 Location: Vancouver
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You borrow someone else shares and sell them.
The risk is that if they want to sell their shares you HAVE to pay them back, as in buy new shares from the market at whatever the price is at the time and return it to them.
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03-10-2010, 10:47 PM
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#3 | | Captain Happy Bubble is my Homeboy
Join Date: Sep 2008 Location: Vancouver
Posts: 321
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so it is just anyone? like if the market is in the middle of a crash and the guy says he wants his shares back he has to get them right then?
and where do lenders and short sellers meet for transactions, is there a market alone for them?
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03-10-2010, 11:37 PM
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#4 | | Orgasm Donor & Alatar owned my ass twice!
Join Date: Mar 2003 Location: Vancouver
Posts: 6,803
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Your brokerage does it all for you.
They will also answer all these questions for you promptly and with great enthusiasm in hopes of obtaining your business.
Don't be shy.
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03-11-2010, 12:36 PM
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#5 | | Rs has made me the man i am today!
Join Date: Apr 2004 Location: Vancouver
Posts: 3,073
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Instead of buying, then selling,
You sell first, then you buy
You sell `borrowed`shares, and you buy them back later.
So you sell high, hoping that the price will drop; then you buy them back at a lower price, thus making a profit.
It`s risky because your loss is limited and you`re betting against the normal upward trend of the stock market.
Why do you want to short sell?
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03-11-2010, 08:11 PM
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#6 | | Captain Happy Bubble is my Homeboy
Join Date: Sep 2008 Location: Vancouver
Posts: 321
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i wasnt really wanting to. just set up my self brokerage account today and am in my csc and never understood the actual way it worked. they havnt given any clear examples in the textbook
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03-11-2010, 10:47 PM
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#7 | | I STILL don't get it
Join Date: Dec 2003 Location: Vancouver
Posts: 457
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A) You speculate that stock A will fall in price in the future (you go to your broker)
B) Broker looks for a client with Stock A shares and sells it for you at market price
Result:
If price instead goes up, you incur a loss because now you are buying back Stock A at a higher price to return the stock to the client the stock was borrowed from. If price goes down, you simply buy it at the lower price and pocket the profit.
Short selling only works if you feel that the price will go down in the future.
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03-13-2010, 07:41 AM
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#8 | | Diagonally parked in a parallel universe
Join Date: Dec 2001 Location: Vancouver
Posts: 1,401
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| Quote:
Originally Posted by waddy41 
It`s risky because your loss is limited and you`re betting against the normal upward trend of the stock market.
Why do you want to short sell?
| I'm pretty sure it's a typo in your reply but just for clarity for others, theoretically, there's no limit to the amount you can lose by short-selling so that's why it's so risky. When you own a stock, your loss is limited to the value of the stock.
You can also read up on options and contracts if you're interested in something similar.
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03-14-2010, 03:40 AM
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#9 | | Rs has made me the man i am today!
Join Date: Apr 2004 Location: Vancouver
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Thanks 97ITR I did mean unlimited.
It`s actually not unlimited, but it is definitely unknown. Whereas if you bought a stock, you know exactly how much you will lose if the price drops to zero.
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03-24-2010, 10:47 PM
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#10 | | Banned (BBM)
Join Date: May 2005 Location: vancouver
Posts: 117
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| wtf
you're taking the CSC and dont know how short sell work?
what the fuck man
geeezz.. when you buy shares or sell nowadays, there is no more physical transferring of shares etc
man.. you shouldnt even looking into what went on last couple of years
naked short selling...
google that
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03-25-2010, 08:43 AM
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#11 | | I *heart* Revscene.net very Muchie
Join Date: Sep 2004 Location: Vancouver
Posts: 3,577
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if u dont understand how short selling works even during a course, i dont know what to say
the stock market is a terrible place
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