HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
XM information and reviews
XM
86%
Exness information and reviews
Exness
86%

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.

#source


RELATED

Unlocking Opportunities in Global Commodity Markets with FXTM’s Advanced CFD Trading

Step into the world of global commodities trading with FXTM, where we offer a gateway to diverse investment opportunities through advanced CFD trading. Experience the flexibility and potential of trading...

Cryptocurrency Post Apocalypse

At the junction of 2018 and 2019, bitcoin's price was at the bottom - the asset was trading at 3200 dollars. This was the price level of mid-2017...

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...

Ethereum Versus Ethereum Classic: What’s The Difference?

Although Bitcoin was the first-ever cryptocurrency to be created, several cryptocurrencies have since arrived that offer additional features, benefits, and use cases, Ripple and Litecoin...

The Best Commodity Trading Tips and Tricks

Commodity trading is where various commodities and their derivatives products are bought and sold. Commodity markets include various raw materials...

US Stock Indices: The Past and the Present

There is a saying in the world of finance: "America will sneeze, but the whole world will catch a cold." But what is the way to determine how serious...

Olymp Trade: What a Crypto Investor Needs to Know in 2022

The year 2021 was a tremendous success for the cryptocurrency market. Bitcoin hit an all-time high as did nearly all altcoins. However, 2022 started with a big price drop...

How to Get into Online Metal Trading?

The most popular precious metals in metals trading are gold and silver. The latter is strongly linked to the main currencies and the world economy as a whole. Precious metals...

Relative Strength Index

The Relative Strength Index (RSI) is an oscillator that measures a particular financial instrument's current relative strength compared to its own price history...

New York Stock Exchange (NYSE): Defined & Explained

The New York Stock Exchange (NYSE) appeared 231 years ago, immediately changed the US market, and became the largest marketplace for buying and selling assets in the world...

How to Predict Price Movements in the Forex Market in 2022

Many beginning traders do not understand why forex forecasts are necessary. However, analysis of financial markets has been and remains the main guarantee of success of a forex trader. So, how to make an accurate forecast?

When a fracture in the spread of COVID-19 pandemic can be expected?

The fall in global financial markets, which began in February 2020, is associated with the COVID-19 pandemic...

Small-caps and large-caps. What’s the difference for those who buy them?

Shorthand for "market capitalization", the term market cap refers to the total value of all a company’s shares of stock. One can calculate it by multiplying...

Online Cryptocurrency Trading: Features and Advantages

The year 2008 marked the birth of the crypto market. It was in August when the domain bitcoin.org was registered and the description (White Paper) of the cryptocurrency was published...

Trading Bitcoin and Ethereum on Forex

The sharp rise in the price of Bitcoin has led many Forex traders to try to trade in Bitcoin and other altcoins. Indeed, if there is a financial asset that demonstrates...

Navigating the Exciting Challenge of Trading Over 150 Stocks with ModMount

ModMount presents traders with the exhilarating opportunity to dive into one of the largest and most dynamic online markets – the stock market. This platform challenges traders, whether novice or seasoned...

Forex Vs. Stocks - What are the Differences?

In the Olymp Trade platform, traders can choose Stocks or Forex trading mode, each optimized for their respective trading instruments. The fundamental difference between...

How to Assess PAMM Account

PAMM Account Monitoring Service provides an extensive overview of tools for analyzing the work of managers. In general, all monitoring...

Synthetic and Crypto Currency: What Are They, How to Create and Use Them

The set of trading tools that NordFX offers to its clients is a whole arsenal that allows a trader to apply the most effective strategies and win on the fields...

Which US companies can increase dividends despite COVID-19

The US economy has entered a deep recession since the beginning of the COVID-10 pandemic, and American corporations along with it. Dividends are in jeopardy...

Vantage information and reviews
Vantage
85%
FP Markets information and reviews
FP Markets
81%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Just2Trade information and reviews
Just2Trade
76%
FXNovus information and reviews
FXNovus
75%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.