How do I "short" a stock ? What does it even mean ?

You buy high and sell low, so your profit is smaller than small (= short). This tactic is pretty common on biz.

>>1946619
It's when you borrow stock, sell, then buy back at a lower price and give back the stock

The difference is yours

>>1946619

You need to open a margin account with a broker.

1. Broker lends you x shares to sell at $n per share
2. You wait for the price to drop
3. You buy that same number of shares at a lower price

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>>1946638
>>1946639
But how can you make money if you sell back at a lower price?

Shorting a stock means buying the stock at a high price and selling it low, you're compounding the interest differential. Shorting a stock means to gain from that difference of price so that when investor confidence regains the stock also regains.

Its best that you open a brokerage account first to capitalize on this mechanism, because the commission percentage you pay gets accumulated into a dividend paying account that grows consistently the more you buy when the price is high.

tl;dr: Buying High = Higher Dividend accumulation

>>1946643
Because you buy back instead of sell, read

Also, stay away from the stock market, you'll lose money

>>1946643

because you're borrowing against the difference of price.

Ok, lets say you found a stock that's valued @ $40, last week it was $38.45. Shorting a stock would mean that you buy the stock at $40 and then requesting to borrow from the broker an amount equal to that so that when the price drops back down to $38, you sell it back again.

You made a profit of $1.55 x the amount of shares you bought.

>>1946649
What makes you say that? I actually going pretty well on the stock market, but I'm obviously a beginner as you can tell. I only do sort of speculative buys where I research a few companies and invest in a small diversified basket of stocks made by myself. It has worked okay so far. I sell nearly all of them for higher then I got them and have made a decent profit so far.

But I obviously don't know much about how it works

>>1946619
Don't short a stock if you don't have any experience in trading, wait til you know everything about the market and have a long and succesful trading history

>>1946652
>>1946649
Ok I get it now. The stock gets credited to your account when you borrow it and then you buy back the same stock with that credit for a lower price and you make the difference.

Only one question. How do you stop yourself from getting fucked over of the price begins rising by a lot? Is there a "shorting" equivalent of the standard limit order.

>>1946675
Yes. You can place a buy-stop order.

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>>1946634
>You buy high and sell low

Wait, so if i short on a bunch of penny stocks heading towards bankruptcy, that go down 10% a day, i can make money off this?

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>>1946619
Non-meme answer:

Shorting something means you're betting against it.

So shorting a stock means that you think it's going down in price. How do you make a profit? Sell the stock first, then buy it back after the price goes down (if you're right). How does it work? You borrow shares from your broker. Any other technical terms you see is just wall-street jargon., because it really is that simple.

Is it a good investment? Sure, but it's risky because you can lose money indefinitely if the stock sky rockets. You're obligated to buy back.

>>1946712
In theory, yes.

>>1946712
Why would a broker have penny stocks? Your assuming he has these shit stocks?

>>1946619
Short is the opposite of tall. You have to do the opposite of talling a stock.

>>1946712
You can't make money off of penny stocks you degenerate.

Read a book, Jesus f christ.

>>1946619
ITT people confuse shorting with a put option. Shorting literally means selling an option, long means holding the option. A put option is an option which you get the right to sell an asset at a fixed strike price, until the option expires.
http://www.investopedia.com/terms/p/putoption.asp

>>1946675
you'll have to come up with collateral, the lower your leverage, the higher the stock can rise before you get liquidated

>>1946718
Why would a broker lend you stocks tho.

>>1946747
coming up with collateral insures that you'll be able to buy back if you get liquidated

>>1946740
Unless I missed it, no one here has confused shorting with a put option. Options are derivatives that allow you to have a different risk graph than shorting the actual stock would have.

http://www.investopedia.com/terms/s/short.asp?ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186

>>1946748
which is just a short way of saying your broker makes a percentage if you win and takes your house/car/wife/daughter when you inevitably lose.

>>1946747
The same reason anyone lets you borrow anything:
interest and fees.

>>1946760
nah, you'll be putting in collateral beforehand, you can't lose more than you're putting in (aka willing to lose)

>>1946747
Because they make money off of you trading. Doesn't matter if you're long, or short, or buying calls or puts.

The only thing that matters, is that you're active, because they make money off of commission.

However, a good broker will advice you not to short a stock if he thinks it's a bad idea. Because in the long run, you'll pussy out of future trades and short opportunities, which means less money for them.

If you insist, obviously he'll let you short whatever you want. But a good broker won't just "lend you stocks" at a drop of the hat.

>>1946718
So when you sell, stock goes down and buy back with your own money, how is that called

>>1946838
A successful short.

>>1946838
So when you buy, stock goes up and sell back to get your money, how is that called

They're memeing you hard rn, just look at investopedia don't ask a bunch of retards that use pepe memes to explain themselves

>>1946675
>Only one question. How do you stop yourself from getting fucked over of the price begins rising by a lot? Is there a "shorting" equivalent of the standard limit order.

If the price rises a lot you borrow again from the broker, so if the price was $40 when you got it and it increased to $45 you borrow that $5 difference from the broker so when the stock decreases you still make a profit from the difference. The previous borrowing you did when you speculated a price drop just increases the range of your potential profit.

So imagine a scale from 1-10, you speculated the price will drop so thats 1-5, the price increased to 45 so thats 5-10, when the price increased you're making the difference between 4-8.

>>1947058

Investopedia just gives you the theory of shorting, not practical real world examples.

A book can teach you that burning yourself is painful but you would never know how it feels until you get burnt yourself.

>>1946619
The brokerage sells the stock that you shorted and puts the money in your account but you have to buy back the stock in either a certain timeframe or if the brokerage calls you.

If the stock went down then you could buy back the stock to close out the short position and make money. If the stock goes up then your basically fucked.

>>1947569
And also you can use stop loss to prevent getting fucked too hard. If you dont use a stop then your losses could be a lot.

https://youtu.be/iqP9tZRlpy8

>>1946652
>Shorting a stock would mean that you buy the stock at $40 and then requesting to borrow from the broker an amount equal to that so that when the price drops back down to $38, you sell it back again.
Nigger what the fuck are you saying
Shorting is when you borrow a stock, sell it, and then buy it back later, pocketing the difference in price.