Selling Short Is for Professional Traders Only

Selling short can be a difficult and nerve-racking business, especially when working with stocks. There may be extra fees involved, and if your broker is unable to borrow a particular stock, you may not even be able to put on the desired short position. And keep in mind that the overall long-term trend of the stock market is for prices to move higher, so you're always trying to buck the long-term trend when selling a stock short. Finally, in theory, the potential loss on a short is unlimited, while buying a stock limits your losses to the sum of your initial investment.

Despite all the downsides associated with shorting, I can honestly say that it's silly to assert that selling short is for professionals only. Not many individuals consider shorting, so there's ample opportunity to make money at it.

If you're interested in trying your hand at shorting, consider selling futures contracts short as an initial effort. The barriers for shorting futures contracts aren't quite as high as those involved with shorting stocks. Plus there's never a futures contract that needs to be borrowed — you just short and wait for a price drop to buy back.

Was this article helpful?

0 0
Thinking Big and Getting Rich

Thinking Big and Getting Rich

From rags to riches – it happens more often than you might think. In fact, it could be you! Are you content with life as it is or do you find yourself dreaming your way to riches? If you answered yes, then you are definitely on the right track because without your imagination – without dreaming – you are not going to get there.

Get My Free Ebook

Post a comment