Understanding Short Selling | by Wall Street Survivor

What is short selling? Most people think of investing as buying a stock (or other asset) and making money when its price goes up - but it’s also possible to make a profit when a stock price goes down. This process is called short selling (or shorting). Short selling isn’t all peaches and cream. There are opportunities for high returns, but as usual, these come with high risks. The big risk here is that there is no limit to your losses. When you buy a stock, you can only lose the amount that you invested. But when you short, your losses are infinite because there is theoretically no end to how high a stock’s price can rise. Short selling isn’t for everyone. It requires a lot of time and research, and a desire for high risks and high returns. Short selling is primarily used for speculator looking to make a profit when the market goes down or investing looking to hedge their position. Learn more about about short selling with Wall Street Survivor's Understanding Advanced Techniques course: http://courses.wallstreetsurvivor.com/is/16-understanding-advanced-techniques/?courseComplete=1&courseId=924#!

Comments

1. I don't get it
   it's like getting your money back right? no more no less, i think i missed something.
2. Here after United Airlines incident.
3. Yea, took me a while to understand. I get it. I'm sure others posted similarly, but here's an example. I'm going to borrow a friends phone that is worth $100 and I sell it off to some stranger. I just made $100 for borrowing my friends phone. However, via stipulation I have to buy that phone back, so that stranger, say cracks the screen, now the phone is worth $70. I'd like to buy it back from him. Now, I just made $30 simply off borrowing my friends phone that I never truly owned.
4. ok so it's buying a stock at a set value...
   then when market goes down selling that stock to the company and receiving the difference..... so why say BAROWING it changes the definition...or am I missing something
5. very well explained, i was lucky to find this vídeo when studying for my financial markets exam! big thank u from Portugal!
6. lol thats from how i met your mother
7. how about short sell and bomb the company ?
8. Wait so is it basically like Binary options.
9. Short sellers are assholes
10. Nailed it.
11. himym shoutout i see you
12. thanks mate! :)
13. Thank you. This is interesting and DOES seem extra illegal and sketchy, but I like it.
14. what if there's no supply at all for shorts to cover?
15. After selling a stock, is there such thing as a time frame to buy the stock back? Say I start off with selling a share of XYZ at $10 and expect it to drop to $9 within 2 weeks. Do I need to buy the stock back before the settlement date of selling my stock?
16. That ending explanation wasn't well done. You could've said "Image if the stock price went to $1,000, now the only way to pay back the debt in shares is to pay $1,000." Done in two seconds and fits the visual representation much better.
17. Wait... "Jack calls his broker"? So, it's like, 1970?
18. I still don't understand how you're profiting if you're buying it back. I been understanding everything related with stock trading until now, I feel stuck.
19. How do you "borrow" a stock?
20. "Trading Places" brought me here