Bitshares Focus: Investment Language 101 Series: TERM OF THE DAY: -- What Is: ' Short Selling ' | E.46 | Trading Candle Cheat Sheet Incl. Each Episode.
A series designed to help all the new people flooding into & entering Crypto/Investments daily who get thrown into the rabbit hole so to speak and everything is new to them.
-- Bitshares 101 Focus/Resources Section for New Crypto Folks now included near the end of each post - starting just prior to Christmas 2017. BTS is a Decentralized Exchange and much more. Very undervalued!
It is a TLDR / Short Form Series, covering ONLY one thing each episode in blue collar, easy to understand language to give a SHORT OVERVIEW of the term or lesson of the day.
It is specifically designed this way to keep it short and simple.
People can then search out extra info if they wish.
I've never seen a regular series or resource running on Steemit to continually address this basic need so I decided to do it.
TERM OF THE DAY:
What is....
' Short Selling ' ?
--
Short selling is the sale of a security that is not owned by the seller or that the seller has borrowed. Short selling is motivated by the belief that a security's price will decline, enabling it to be bought back at a lower price to make a profit. Short selling may be prompted by speculation, or by the desire to hedge the downside risk of a long position in the same security or a related one. Since the risk of loss on a short sale is theoretically infinite, short selling should only be used by experienced traders, who are familiar with the risks.
--
Breaking Down...
' Short Selling ' :
--
Consider the following example: A trader believes that stock SS, which is trading at $50, will decline in price. She therefore borrows 100 shares and sells them. The trader is now “short” 100 shares of SS, since she has sold something that she did not own in the first place. The short sale was only made possible by borrowing the shares, which the owner may demand back at some point.
A week later, SS reports dismal financial results for the quarter, and the stock falls to $45. The trader decides to close the short position and buys 100 shares of SS at $45 on the open market to replace the borrowed shares. The trader’s profit on the short sale – excluding commissions and interest on the margin account – is therefore $500.
Suppose the trader did not close out the short position at $45 but decided to leave it open to capitalize on a further price decline. Now, assume that a rival company swoops in to acquire SS, because of its lower valuation, and announces a takeover offer for SS at $65 per share. If the trader decides to close the short position at $65, the loss on the short sale would amount to $15 per share, or $1,500, since the shares were bought back at a significantly higher price.
-- Short Sale Metrics:
Two metrics used to track how heavily a stock has been sold short are short interest and short interest ratio (SIR). Short interest refers to the total number of shares sold short as a percentage of the company’s total shares outstanding, while SIR is the total number of shares sold short, divided by the stock’s average daily trading volume.
A stock that has unusually high short interest and SIR may be at risk of a “short squeeze,” which could lead to an upward price spike. This is a constant risk that the short seller has to face. Apart from this risk of runaway losses, the short seller is also on the hook for dividends that may be paid by the shorted stock. In addition, for heavily shorted stocks there is a risk of a “buy in.” This refers to the fact that a brokerage can close out a short position at any time if the stock is exceedingly hard to borrow and the stock's lenders are demanding it back.
-- Short Selling In Context:
While short selling is frequently vilified and short sellers viewed as ruthless operators out to destroy companies, the reality is that short selling provides liquidity to markets and prevents stocks from being bid up to ridiculously high levels on hype and over-optimism. Although abusive short-selling practices, such as bear raids and rumor-mongering to drive a stock lower, are illegal, short selling—when done properly—can be a good tool for portfolio risk management.
Your Friend in Liberty, Barry.
Trading Candle Cheat Sheet:
--
Further Reading/Source/Resources
Friend of the People -- Enemy of the State.
--
I am leaving these images I made here until I figure out one that fits properly and looks right for the first/main image for the post/series.
--
Since Steemit dev's changed the size of the picture frame that shows, it has honestly been a real problem getting images to match the screen, it was perfectly fine months ago before they messed around with it.
SMH.
Bitshares 101 Focus/Resources Section:
for New Crypto Folks.
https://bitshares.org/
--
-- Bitshares is a Trading platform, and a LOT more.... designed by blockchain wizard here Dan Larimer - @dan / @dantheman.
I've blogged on him, and BTS many many times.
It's a place you can use that is decentralized, with an active community, to use trading lessons like this, that we are learning together.
Just a few of my past $BTS blogs....
to help you apply lessons today!
--
Thanks for reading, have a nice day.
PixaBay has tons of free pictures for us all to use!!!
Super Easy/Fast Picture Edits / Resizing at: http://www.picresize.com/ and also https://www298.lunapic.com/editor/
If you liked this blog post - please Resteem it and share good content with others!
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Some of my recent blogs:
--
Most Images: Gif's - via Giphy.com , Funny or Die.com / Pixabay. Today:
If you feel my posts are undervalued or you want to donate to tip me - I would appreciate it very much.
--
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EOS (EOS) - 0xD37bEFf5bf07E3aa432de00cE0AaA8df603A4fB0
Ethereum (ETH) - 0x3Ad69Ff057C9533ca667B2d7E3E557F5eeFd4477
Ethereum Classic (ETC) - 0x5ab2b08d4ce8d454eb9d1ecc65c6d8b0c5f9784c
Bitcoin (BTC) - 18J6RRuzX4V7b2CDbx7tWZYNBLkkGWsvWX
DASH - XgZvsvSZgPkNbmGbRhc3S1Pt2JAc7QHwiS
PIVX - DA3azxQqJiX9t7EviuacpamfNhMi2zGAUh
Stratis (STRAT) - SNsJp6v1jXvKWy4XcXSXfNQ9zhSJJppJgv
ZCash (ZEC) - t1aCPEYELkGaf3GtgGTiCEDo7XfPm4QEwmL
Please note -- I will have limited internet access for awhile -- so PLEASE do not be upset that I cannot reply right away, or to everyone. I am dealing with some changes, and will have limited time online and will be happy if I get a few blog posts up a week.
This has really upset some people but I do not force my opinions on others, or need to communicate every detail of my life or issues, most people do not care anyways. I invested around 10 hours or more a day on Steemit most of my first 13 mths here, trying to build community, put out content and engage people, help and donate to people, and I just do not have that time in my life right now, and that includes for replies and voting/curation.
I have done my best, sorry if you do not understand like some are clearly having a problem with. It's a blogging platform, and I will do my best at everything, and to keep blogging.
Carry On.
A series designed to help all the new people flooding into & entering Crypto/Investments daily who get thrown into the rabbit hole so to speak and everything is new to them.
-- Bitshares 101 Focus/Resources Section for New Crypto Folks now included near the end of each post - starting just prior to Christmas 2017. BTS is a Decentralized Exchange and much more. Very undervalued!
It is a TLDR / Short Form Series, covering ONLY one thing each episode in blue collar, easy to understand language to give a SHORT OVERVIEW of the term or lesson of the day.
It is specifically designed this way to keep it short and simple.
People can then search out extra info if they wish.
I've never seen a regular series or resource running on Steemit to continually address this basic need so I decided to do it.
TERM OF THE DAY:
What is....
' Short Selling ' ?
--
Short selling is the sale of a security that is not owned by the seller or that the seller has borrowed. Short selling is motivated by the belief that a security's price will decline, enabling it to be bought back at a lower price to make a profit. Short selling may be prompted by speculation, or by the desire to hedge the downside risk of a long position in the same security or a related one. Since the risk of loss on a short sale is theoretically infinite, short selling should only be used by experienced traders, who are familiar with the risks.
--
Breaking Down...
' Short Selling ' :
--
Consider the following example: A trader believes that stock SS, which is trading at $50, will decline in price. She therefore borrows 100 shares and sells them. The trader is now “short” 100 shares of SS, since she has sold something that she did not own in the first place. The short sale was only made possible by borrowing the shares, which the owner may demand back at some point.
A week later, SS reports dismal financial results for the quarter, and the stock falls to $45. The trader decides to close the short position and buys 100 shares of SS at $45 on the open market to replace the borrowed shares. The trader’s profit on the short sale – excluding commissions and interest on the margin account – is therefore $500.
Suppose the trader did not close out the short position at $45 but decided to leave it open to capitalize on a further price decline. Now, assume that a rival company swoops in to acquire SS, because of its lower valuation, and announces a takeover offer for SS at $65 per share. If the trader decides to close the short position at $65, the loss on the short sale would amount to $15 per share, or $1,500, since the shares were bought back at a significantly higher price.
-- Short Sale Metrics:
Two metrics used to track how heavily a stock has been sold short are short interest and short interest ratio (SIR). Short interest refers to the total number of shares sold short as a percentage of the company’s total shares outstanding, while SIR is the total number of shares sold short, divided by the stock’s average daily trading volume.
A stock that has unusually high short interest and SIR may be at risk of a “short squeeze,” which could lead to an upward price spike. This is a constant risk that the short seller has to face. Apart from this risk of runaway losses, the short seller is also on the hook for dividends that may be paid by the shorted stock. In addition, for heavily shorted stocks there is a risk of a “buy in.” This refers to the fact that a brokerage can close out a short position at any time if the stock is exceedingly hard to borrow and the stock's lenders are demanding it back.
-- Short Selling In Context:
While short selling is frequently vilified and short sellers viewed as ruthless operators out to destroy companies, the reality is that short selling provides liquidity to markets and prevents stocks from being bid up to ridiculously high levels on hype and over-optimism. Although abusive short-selling practices, such as bear raids and rumor-mongering to drive a stock lower, are illegal, short selling—when done properly—can be a good tool for portfolio risk management.
Your Friend in Liberty, Barry.
Trading Candle Cheat Sheet:
--
Further Reading/Source/Resources
Friend of the People -- Enemy of the State.
--
I am leaving these images I made here until I figure out one that fits properly and looks right for the first/main image for the post/series.
--
Since Steemit dev's changed the size of the picture frame that shows, it has honestly been a real problem getting images to match the screen, it was perfectly fine months ago before they messed around with it.
SMH.
Bitshares 101 Focus/Resources Section:
for New Crypto Folks.
https://bitshares.org/
--
-- Bitshares is a Trading platform, and a LOT more.... designed by blockchain wizard here Dan Larimer - @dan / @dantheman.
I've blogged on him, and BTS many many times.
It's a place you can use that is decentralized, with an active community, to use trading lessons like this, that we are learning together.
Just a few of my past $BTS blogs....
to help you apply lessons today!
--
Thanks for reading, have a nice day.
PixaBay has tons of free pictures for us all to use!!!
Super Easy/Fast Picture Edits / Resizing at: http://www.picresize.com/ and also https://www298.lunapic.com/editor/
If you liked this blog post - please Resteem it and share good content with others!
--
Some of my recent blogs:
--
Most Images: Gif's - via Giphy.com , Funny or Die.com / Pixabay. Today:
If you feel my posts are undervalued or you want to donate to tip me - I would appreciate it very much.
--
LiteCoin (LTC) - LKdsnvSXk9JW99EiNicFMGKc1FXiBo9tUE
Monero (XMR) - d8ecb02c09f70ec10504b59b96bc1f488af28b05933893dfd1f55b113e23fbff
EOS (EOS) - 0xD37bEFf5bf07E3aa432de00cE0AaA8df603A4fB0
Ethereum (ETH) - 0x3Ad69Ff057C9533ca667B2d7E3E557F5eeFd4477
Ethereum Classic (ETC) - 0x5ab2b08d4ce8d454eb9d1ecc65c6d8b0c5f9784c
Bitcoin (BTC) - 18J6RRuzX4V7b2CDbx7tWZYNBLkkGWsvWX
DASH - XgZvsvSZgPkNbmGbRhc3S1Pt2JAc7QHwiS
PIVX - DA3azxQqJiX9t7EviuacpamfNhMi2zGAUh
Stratis (STRAT) - SNsJp6v1jXvKWy4XcXSXfNQ9zhSJJppJgv
ZCash (ZEC) - t1aCPEYELkGaf3GtgGTiCEDo7XfPm4QEwmL
Please note -- I will have limited internet access for awhile -- so PLEASE do not be upset that I cannot reply right away, or to everyone. I am dealing with some changes, and will have limited time online and will be happy if I get a few blog posts up a week.
This has really upset some people but I do not force my opinions on others, or need to communicate every detail of my life or issues, most people do not care anyways. I invested around 10 hours or more a day on Steemit most of my first 13 mths here, trying to build community, put out content and engage people, help and donate to people, and I just do not have that time in my life right now, and that includes for replies and voting/curation.
I have done my best, sorry if you do not understand like some are clearly having a problem with. It's a blogging platform, and I will do my best at everything, and to keep blogging.
Carry On.
--
LiteCoin (LTC) - LKdsnvSXk9JW99EiNicFMGKc1FXiBo9tUE
Monero (XMR) - d8ecb02c09f70ec10504b59b96bc1f488af28b05933893dfd1f55b113e23fbff
EOS (EOS) - 0xD37bEFf5bf07E3aa432de00cE0AaA8df603A4fB0
Ethereum (ETH) - 0x3Ad69Ff057C9533ca667B2d7E3E557F5eeFd4477
Ethereum Classic (ETC) - 0x5ab2b08d4ce8d454eb9d1ecc65c6d8b0c5f9784c
Bitcoin (BTC) - 18J6RRuzX4V7b2CDbx7tWZYNBLkkGWsvWX
DASH - XgZvsvSZgPkNbmGbRhc3S1Pt2JAc7QHwiS
PIVX - DA3azxQqJiX9t7EviuacpamfNhMi2zGAUh
Stratis (STRAT) - SNsJp6v1jXvKWy4XcXSXfNQ9zhSJJppJgv
ZCash (ZEC) - t1aCPEYELkGaf3GtgGTiCEDo7XfPm4QEwmL
Please note -- I will have limited internet access for awhile -- so PLEASE do not be upset that I cannot reply right away, or to everyone. I am dealing with some changes, and will have limited time online and will be happy if I get a few blog posts up a week.
This has really upset some people but I do not force my opinions on others, or need to communicate every detail of my life or issues, most people do not care anyways. I invested around 10 hours or more a day on Steemit most of my first 13 mths here, trying to build community, put out content and engage people, help and donate to people, and I just do not have that time in my life right now, and that includes for replies and voting/curation.
I have done my best, sorry if you do not understand like some are clearly having a problem with. It's a blogging platform, and I will do my best at everything, and to keep blogging.
Carry On.
what exchanges currently can one use to short crypto? Or is there anyway to short cryptos? Not to say this is a good idea considering 2017 most cryptos went over 1000% or more in returns. Thanks.
It's like binary to me, the same concept, but different methods. Also, this includes loaning which makes it spectacular amidst all
I used to play a bit with shorts when I was into tech stocks, back during the "dot-com boom." Prices used to fly around SO much on rumors... never did all that well at it, although I guess I made more than I lost, on the balance.
Hope life is treating you OK, my friend!
I am getting by my friend. Thanks for stopping by.
I wrote you back on replies a couple times the last while but did not hear back...... this new reply system they have sucks here LOL
I wish you the best always @denmarkguy
Thanks for tutorial . Very good .
thanks for the tips i was really helpful! for inspirational, motivational and love quotes follow me @giftedwords
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