Taking Advantage on A Bearish Market

Shorting a stock has been popular and widely accepted investment strategy in past years. It had become increasingly globally known when Bill Ackman and David Einhorn, two of the most remarkable names in the investment industry, pulled off major bets against the biggest companies in the stock market, which triggered investors’ interest in short selling. 

Rising in Lows 

Shorting a stock, or commonly known as short-selling, is a technique of investors in which they sell the shares they do not own. A broker, or a third party, makes it possible by buying the stock and lending it to investors. The borrower will return the stock when its price falls down to profit from the difference in its original price or will have to buy the stock at a higher price at a loss if price goes up. 

Traders have found a great way to rise in lows by making extra money even from a falling market. By shorting a stock, they are able to speculate on stock prices or use it for the less risky hedging purposes. 

Speculation, meanwhile, entails higher risks given the short time frame of the trade because most speculators only hold their selling position in a span of weeks to few months. But when the company’s shares sustain its declining price, it adds more value to your portfolio. 

If shares prices go up after shorting a stock, investors may not worry as they can place a buying order and return the stock to the lender or the broker, closing the short position. 

Shorting a stock can also use to protect your investment portfolio through hedging. Normally, investors with long positions capitalize on short selling to protect their stocks. This less riskier strategy does not aim to gain any profit but only to safeguard other investments. 

Hedging is like investing in an insurance for your property, such as your car or house. You can utilize, for example, a derivative contract (like futures) in the stock index to pull off short positions in times of downward movement from your long position on blue chip stocks. 

Shorting a stock gives relief to investors in times of bearish market. While it allows traders to speculate or hedge, this activity also has its downsides and restrictions. For instance, you can lose more than 100% of your money if prices sustain an upward trend. Additionally, short selling is not possible if stock owners are not willing to lend.

How to amplify earning with margin cryptocurrency trading

Leverage is the practice of using an amount of debt or borrowed capital to take a position in an investment, finance a project, or fund a business and...

Artificial Intelligence and Machine Learning in Trading

Over the past 60 years, AI and machine learning have made a breathtaking jump from science fiction to the real world. Though these technologies are still...

Five Bitcoin Day Trading Setups to Help You Make Money

Bitcoin trading has become big business in recent years as people have realised that the new and emerging market place is one that has the potential...

How to Amplify Earning With Margin Trading?

Leverage is the practice of using an amount of debt or borrowed capital to take a position in an investment, finance a project, or fund a business and...

What are binary options in the global financial market

In the global financial market, as in many other areas of commercial activity, there are often categories that seem to the uninitiated person very difficult to understand and use...

Current trends in the precious metals market

Gold and other precious metals are widely recognized as an investment asset class, that is why we would like to tell our readers about current trends...

Coronavirus COVID-19 pandemic possible scenarios

Epidemiologists at the University of Minnesota continue to do their research on Coronavirus COVID-19. They recently published a report in which they...

Stocks of companies working on COVID-19 vaccine

The spread of coronavirus COVID-19 has paralyzed social and economic activity in most countries of the world. Despite the fact that a number of countries...

Gold at 8 years highs. Why so and who will benefit from it?

The business of storage operators with a high level of security, in which physical, not virtual, metal is stored, is in a boom of demand from wealthy investors...

Top 10 Forex Brokers 2020

200+ Forex Brokers
TOP 10 Best Forex Trading Platforms
Best Forex Platforms 2020

A variety of web terminals and specialized software makes a choice of a trading platform a difficult one for a novice trader. What should be this vital decision based on? To begin with, it is necessary to highlight the main criteria that high-quality software must meet for making money on financial markets...

Top 10 Forex Platforms 2020

All Forex Platforms