The smooth operation of the stock market depends on the coordinated development of the long and short mechanism. One of the important reasons for the continuous accumulation of risks in China stock market is that the short-selling mechanism corresponding to the long-selling mechanism is imperfect and at an obvious disadvantage. Introducing credit trading and stock index futures trading and strengthening the short-selling mechanism are both the needs of market development and the basic conditions.
The short-selling mechanism is: when the price is about to fall, you can pay the deposit of 10% in advance, borrow goods from a third party and sell them, and then repurchase them from the third party when closing the position to recover the deposit.
Short selling is simply: if there is no goods, sell them first and then buy them. For example, you see 10 yuan's A-share, and analyze that its market outlook will fall to 8 yuan in a certain period of time, but it is in your hands.
You don't own A shares. At this time, you can borrow some A shares from A-share holders and sign an agreement to return these borrowed shares to the original holders within a certain period of time. Suppose you borrow 100 A shares and sell them at 10 yuan to get 1000 yuan in cash. If the stock really falls to 8 yuan within the specified time, you use 8 yuan to buy 100 A shares, spend 800 yuan, and return the 100 shares to the original holder. The original holder's shares remain unchanged, and you earned 200 yuan cash. China's current stock index futures are also short-selling mechanisms. The short-selling mechanism not only refers to the short-selling of stocks, but also includes the short-selling of indexes.