Minimizing the loss in a short sale
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bendicty
Apprentice
Joined: 06 Dec 2005
Posts: 7
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 Posted: 07/23/08 - 05:57 Post subject: |
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| I have a question. Can you help with the answers? In stock market speculation, how does a short sale work? I have understood that big losses can accompany such a short selling practice. That is something that no one wants, of course. How is the loss minimized in a short sale? |
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letisha
Apprentice
Joined: 21 Dec 2006
Posts: 4
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| Posted: 08/22/08 - 01:46 Post subject: |
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| The whole point with short selling is that the trader is hoping to get a profit from doing so. If they sell securities that they do not own, at today's market price, and they then go down later, a profit is already obtained. They are in fact taking a negative position. But if the price goes up, then losses are made. |
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