Can you explain what “shorting stocks” mean In the stock market?
(I read about it but i can’t quite understand the proccess. so you sell stock before buying? how does that work?)
Answer:
1. You borrow stock and promise to return the stock.
2. You sell the stock you borrowed and keep the money.
3. When it’s time to return the guy’s stock you go out and buy him a replacement stock.
2. You sell the stock you borrowed and keep the money.
3. When it’s time to return the guy’s stock you go out and buy him a replacement stock.
If the price of the stock has gone down at replacement time- lucky you. If the price of the stock goes up then you have to buy a more costly replacement to stock you borrowed and sold.
Posted: August 11th, 2010 under US Stock Market.
Tags: shorting stocks