[Hot News] [STOCKS] - What is shorting of stocks? | Buddy Smartphone

Shorting stocks is an interesting approach to stock trading which is deemed the most riskiest venture in the share market.

Stock shorting is a process in which a stock trader who has sufficient faith in his analysis about the prospect of a company feels that the price of that company's stock is going to go down in the near future. When he feels confident on his analysis, this stock trader will then go out looking for the stock owners of this company's stock and borrows their stocks.

After borrowing these stocks, he would then immediately sells these stocks in the stock market with a hope that the prices of the stocks will go down in the near future. Now, if his analysis went right and the prices of these stocks actually goes down, he will then go back and re-purchase these stocks at a lower price and give it back to the original stock holder from whom he had borrowed these stocks earlier. Now, in this process of actually selling stocks even before buying them, the stock trader has actually made reasonable profit without having to spend a lot of time holding these stocks.

The downside of stock trading is when the stock trader's analysis goes wrong and the price of these stocks actually goes up than to what he had sold after borrowing. If after sufficient time frame the prices of these stocks continue to climb and never comes down, he will be forced to buy back these stocks at a higher price than to what he had sold, to hand back the stocks he had borrowed from the original stock owner.

[Hot News] [STOCKS] - What is shorting of stocks?

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