I often hear people say that stocks are short, or that a stock is short. The speaker didn't listen and wanted to know what short selling meant. Do we know what a short selling mechanism is? The following is Xiaobian's understanding of the short-selling mechanism in the stock market, which is for reference only and I hope it will help everyone.
How to understand the short-selling mechanism of the stock market
Generally speaking, the understanding of it means that market investors will take some measures to protect their own interests or take the opportunity to make profits because of their future trend after judging the whole stock market or some interested stocks. This process is called short selling mechanism. After understanding this term, we will have a question, whether there is short selling. In fact, there is a detailed introduction in the following article. Our main concern in this paper is the short selling mechanism.
This short-selling mechanism, here we focus on some of its characteristics, mainly to let investors in the market know its main related content faster, here we mainly summarize the following points:
1. When investors are short, that is, when they judge that the price will fall in the future, they should pay a deposit of 10% in advance, borrow goods from a third party and sell them, and then repurchase them from the third party when they close their positions to recover the deposit. In other words, you can sell it before you buy it.
2. The short selling mechanism is not perfect, and it is at an obvious disadvantage compared with the long selling mechanism in China market.
3. The risk operation of short selling mechanism is mainly carried out by some experienced investors, and it is better for small and medium investors in the market not to participate as much as possible.
The above points are the characteristics of its short-selling mechanism, which can also be said to be his shortcomings, but in fact it still has many functions in the market. Here are a few main introductions: First, the first point is that it can help investors in the market to actively avoid risks and increase market liquidity while avoiding risks. Some people think that the existence of this mechanism makes the stock market and futures market the same to some extent; Second, because of the coordinated development of short-selling and long-selling mechanisms in the stock market, it can operate steadily in the stock market; Third, on the other hand, it can improve the financing efficiency of China stock market and guide the rational investment of the market; This paper mainly introduces several functions of this mechanism, so it is necessary to understand that credit trading and stock index futures trading are introduced in the market to strengthen the short-selling mechanism, and the final result is to meet the needs of market development and make it have basic conditions.
At present, our short-selling mechanism in the domestic market is mainly futures trading, and margin financing and securities lending are also very common, but the scale of margin financing and securities lending is still very small, and there are still few stock varieties that can be received.
What are the advantages of shorting stocks?
1. provides a risk hedging tool for the stock market, which is conducive to reducing the systemic risks of the market and maintaining the stable operation of the market; For example, when there are obvious bubbles in some stock sectors, short-selling forces will quickly gather until the sector falls to a normal or lower valuation level;
2. It provides investors (or investment institutions) with the possibility of using market means to "crack down" fake companies and gain rich profits. Driven by interests, the initiative and "smell" of short-selling institutions are better than those of administrative supervision departments, which objectively promotes the operation of listed companies to be more standardized and transparent;
3. Short selling mechanism also provides more opportunities for ordinary investors to participate in the market and increases the liquidity of the market.
The risk of short selling stocks
For ordinary investors, especially small retail investors, it is unrealistic to short stocks without huge funds as support. Therefore, it is generally not recommended to short stocks, and it is difficult for retail investors to make money from them. The risk is very high, so we must consider it carefully.
The premise that shorting can be profitable is that you accurately predict the short-term downward trend of short-selling stocks. If you make a mistake, you will have to buy back the stock at a low price. Here, the risk of shorting is greater than the risk of going long.
For example, if I buy 100 shares when A shares are10, then my biggest risk is that A shares fall to zero, and my biggest loss is 100%, and 100 shares are 1000. But if I short 100 shares when the price of a stock is10, when it rises to $20, the stock price has already risen by 100%, and my loss is 1000. If it rises to $30 per share, the increase is 200%, and my loss at this time is $2,000. If it continues to rise, the loss will be even greater.
So going long is equivalent to locking the maximum loss of 100%, and shorting may lead to unlimited losses. Whether you are long or short, it is very necessary to stop loss in time.
What are the methods of shorting stocks?
1, securities lending
The so-called securities lending means borrowing securities. Borrow it from who? Securities companies run by investors. Can I sell it naked directly? The current policy does not allow it. How to operate specifically? For the sake of simplicity, transaction fees and other expenses are not considered.
For example, China CSR or CNR some time ago. Because the stock price is surprisingly high, it has deviated far from its value. Investors think the stock price will fall. At this time, investors can borrow China South Locomotive from your broker at the share price of 39 yuan at that time and sell it. Suppose it is 654.38+00,000 shares, and you have 390,000 more cash.
The next market is like you are a director, and your share price has plummeted for two consecutive trading days. At such a time, if you think the stock price has fallen to a relatively reasonable level. 65.438 million shares of China South Locomotive can be repurchased. If the price when you buy back China South Locomotive is 32 yuan, it will cost you 320,000 yuan.
Step 2 choose
The right to choose is a right. But the exercise of this right is for investors to choose whether to exercise it at some time in the future according to its value. Because investors are inevitably divided in their opinions, there are bulls and bears, so options can be divided into call options (bullish) and put options (bearish).