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Kiddelhopper IS now Gone | In buying and selling stocks, what do they mean by selling short or selling long? |
And what are the advantages in doing so?
Thank you |
 |
 
Josh
|
The first answer is not correct but a good guess. I dont know all the ins and outs but basically when you short a stock you are getting that stock and expecting the value to go down. You pick the stock, and you agree to buy the stock at a later date. So, if txn is $35 today and you want 4 that is $140. You are gambling that at some point in the future that it will go down so lets say 2 months from now its selling at $20. You buy the txn stock for $80 ($20*4) now you have a profit of $60 ($140 origional cost-$80 that you bought it back for). The downside to this is that if the stock does not lose value then not only can you lose your full investment but you could actually end up buying it back for more leaving you with over a 100% loss so be careful!
There is more to it than that, too much to write. Just be sure to do your homework before shorting any stocks and get a good understanding f how it works. |
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alextseng4
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A long position you are the buyer and a short position you are the seller.
In the context of equities, when you short sell a position you are selling stock that you do not own (it is borrowed from your brokerage). The intent is that the stock will decline, where you will be able to purchase the stock back and return it. Your profit will be the difference. Selling out of a long position would just mean that you've sold off your long position. So if you hold 100 shares of GS, you sell off the long position - you now have 0 shares.
The problem with short selling is that you theoretically have unlimited risk. If you buy a stock for $10, the most you stand to lose is $10. However, if you short sell a stock at $10 - it very well could go to $1000, $10000, etc...
EDIT:
Maybe this example may give you a clear idea of how short selling works. Say if my cellphone were worth $500 today, you are free to buy it and sell it at that price, and you're like hey can I borrow your cellphone? I say sure, but you have to pay interest on the cellphone value of course for the time you borrow it, when you get your hands on it - you instantly sell it and pocket the $500. Let's say 3 months down the line, the phone can now be freely bought for $200, well you purchase one on the market and return it to me + interest. You've earned $300 minus interest. That in a nutshell is how short selling works. |
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!!!
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Selling short means the broker puts the proceeds from the stock sale in your account. The broker actually "borrows" the stock. You are "long" money and "short" the stock. It also means you have a "short" position in the market.
In order to make a profit on a short sale the price of the stock needs to go DOWN and then call your broker to "buy back" the stock at the lesser price. You have a profit from the difference. We will ignore commissions at this time.
Selling long means buying the stock at a low price, wait for the stock to go up then sell at the higher price for a profit. Let's ignore commission costs at this time.
Some advantages are stock prices go down faster in a short period of time than they will recover and rise. Look at Bear Stearns, a perfect shorting stock. However a perfect long stock is Berkshire-Hathaway Class A shares. |
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financegal27
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When you are long a stock, it means you purchased the stock, and currently hold that position. When you short the stock, you a selling stock that you do not own, you are borrowing the shares from someone else. When you go long a stock you are betting that the stock will go up, so you want to participate in the gains. When you short a stock you are betting the stock will go down and you will be able to cover your position (buy the stock) at a lower price than you sold it and therefore making a profit on the difference. So for example if I thought a ABC stock, which is trading at $40 is going to go down, I'm going to short the stock (sell the shares 100 at $40), when the stock falls to $10, I am going to cover my short (buy 100 shares at $10). So when I sold the shares I received $4000 from the buyer, and when I bought the shares back I only paid $1000 for them, so I made $3000 on the transaction. |
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Anna
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Basically,
short = sell
long = buy
In options trading, if you sell long, you sell a right (but not an obligation) for someone to buy the asset from you. If you sell short, you sell him a right (but not an obligation) to sell you an asset. Advantage: by selling option, you can make money in inactive market. Disadvantage: limited profit and unlimited risk. |
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London NW3
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Selling short means,selling shares that you don't actually own,in the hope you can buy them later when the price is lower than when you sold them.You will not be allowed to do this,as only professionals are given access to this type of trading.
Selling long is wrong,you mean being long in a share.This means you have bought too many shares and should offload some.Eg if new nervousness appears for the share you own,you should sell some to lower your risk,as you are long(holding too many) on the shares relative to the new news |
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Zak
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I don't understood properly but may be its indicating for short term or long term. |
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Matt
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It may be something around the lines of how much money you are buying/selling. |
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