Short selling, also known as short selling/short selling, means selling high and making up low.
There are three main sources of stocks sold by short sellers when they are engaged in short selling:
One is its own brokerage, the other is a trust company, and the third is a financial institution.
Lending stocks to short sellers is very beneficial for the lender, because it can not only provide comprehensive and thoughtful services to customers, but also make stocks appreciate. It is a kind of income for lenders to lend shares on the condition of collecting interest or appreciating the stock price. At the same time, lenders usually take measures to protect themselves and deposit the funds collected by short sellers into the broker's account. [Edit this paragraph] Short selling includes two forms. First, short sellers sell stocks at the current market price, make up their positions when the stocks fall, and earn the difference profit;
Second, sellers are now reluctant to deliver their own shares and sell them by short selling to prevent the stock price from falling, thus playing a role in maintaining value. If the stock price does fall at that time, he can make up his position at a lower market price, so that the income from short selling can offset the loss of owning the stock regardless of the cost, thus avoiding the loss. [Edit this paragraph] Classification of short selling According to the different purposes of short sellers, short selling can be divided into three categories:
One is speculative short selling. In this case, the purpose of short sellers selling stocks is to expect the stock price to fall, and then replenish the same stock at a lower price when it expires. The difference between the two prices is the profit of the short seller. This kind of short selling is speculative, risky and profitable. Speculative short selling has a great influence on the stock market, because when short sellers sell stocks, the supply of stocks will increase and the price of stocks will fall; At the time of replenishment, the stock market demand increased and the price also rose.
The second is short selling for hedging. The fundamental purpose of this kind of short selling is to avoid the loss caused by the falling stock market price.
The third is technical shorting. This kind of short selling behavior can be divided into three situations: the first is short selling based on all its own stocks, including tax purposes, value preservation purposes and expected delivery purposes; The second is short arbitrage, which has arbitrage in different markets and arbitrage at different times; The third type is short selling operated by brokers or brokers, including not only professional members and brokers, but also financial institutions such as investment banks.
Because short selling is highly speculative and has a great influence on the stock market, the behavior of short sellers is obviously speculative. Therefore, the laws of various countries have detailed provisions on short selling in order to minimize the adverse effects of short selling, and some countries also prohibit short selling of stocks. [Edit this paragraph] Ten principles of short selling 1. Short selling is not necessary.
First of all, as an investor, you don't have to be short. Most investors pay attention to bulls, while far fewer people pay attention to bears. Only a few investments are good at long positions, and short positions are also doing well. Kind of like a player who can hit the ball with both hands in a baseball game. Only a few players can do it, like MICKEY MANTEL, but there are still strong and weak points. It is your personal choice whether to make long-short investments at the same time.
Second, the stock market is more likely to rise than to fall.
After the stock rose, it fell back for different reasons. The stock market, bear market, crash and so on will be adjusted, but the stock market itself often reflects the technology, civilization and development of society. The whole development trend of mankind is forward, which is a historical law that no one can stop. Since 50: 00 a hundred years ago, the Dow Jones index has experienced a plunge of 1929, followed by the Great Depression, World War I and World War II, high inflation in the 1980s and the terrorist attack of 9 1 1, and the index still rose to 10000. From the stock market as a whole, the success rate of bears is lower than that of bulls.
Third, the stock decline is caused by its own reasons rather than selling.
Selling (the rapid decline of stocks with huge turnover) often means the arrival of the bottom. For example, a stock leads the rise, and a large number of reversals can turn this stock from an upward trend to a downward trend. In the middle stage of the whole downward trend, the decline of stocks is often accompanied by the shrinkage of trading volume.
Fourth, avoid rolling empty.
Short selling can only be a short-term behavior, not a long-term love war. Short investors can only take one step at most, and when they find that their short positions increase, they will immediately buy back shares to make up for it. Because short selling means that investors borrow stocks to sell, if there are too many short positions, that is, many investors borrow stocks to sell short. Once the stock market reverses, everyone enters the market to buy short positions together, or borrowers ask short sellers to short, the relationship between supply and demand suddenly changes greatly and the stock price rises rapidly. Short investors are forced to buy back shares at high prices, which is called short selling.
5. Gravity also applies to stocks.
As a short-selling investor, you should be more vigilant than a long-selling investor, because the speed of stock falling far exceeds its rising speed, just like the gravity of the earth acting on a stone, but the time is often short.
6. Lendability and stock price law increase the difficulty of short-term investment.
Short selling also sells empty, and the seller borrows it. The first step of short selling is that brokers are willing to lend their shares to investors, so the trading time of empty orders is often longer than that of buying tickets. According to all the rules of the transaction, when the stock is falling all the way, investors can't sell short, and they must wait until the next rise (reported rise) before they can place an empty order. However, ETFs are not subject to this condition. So shorting often doesn't sell well.
7. When encountering a small rebound in the confirmed downtrend, establish a short position.
Because of the above conditions, generally speaking, a small rebound in the established downward trend is the best time to establish a short position. It is very dangerous to try to short when the stock is strong, especially when the stock hits a new high, which is also commonly known as patting the tiger's head.
Eight, use previous experience.
For short investors, one advantage is that they can make full use of the trading history of stocks to analyze stocks. Because shorting must be carried out within the previous stock price range, we can choose a reasonable target by analyzing the previous highs, bottoms, important moving averages and trend lines.
Nine, the weak market is best to make up for it.
The stock market tends to rebound rapidly in the downward trend, and investors should take advantage of the weak repurchase to make profits, and can't wait until the stock market reverses to make up their positions.
10. Avoid stocks with high dividends.
Try to avoid shorting stocks with high dividends, because according to regulations, short sellers should give borrowers dividends.