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Achieving financial security by short selling your stocks

Posted by on Apr 6, 2016

Achieving financial security by short selling your stocks

        Short selling is a risky, but very effective if done correctly, to profit from declining stock prices. Basically, it is a bet against a stock or company. When you buy a stock, you expect the price to go up in order to get money by selling it afterward. On the other hand, when you short a stock you expect the price to go down. There are some online articles that you can find for Oahu, Hawaii real estate agent that had some great breakthroughs in financial security, you can find some advice on her Facebook page // Concerning the stocks, shorting a stock is the inverse of buying a stock, which is often referred as “going long” in broker terminology.

call-a-brokerSo for example, if you hear that some particular company is in financial trouble. You expect their stock price to go down in order to profit from it. Calling your broker on time, before the word spreads is essential. So as soon as you hear that financial troubles situation, call your broker to short 1 share of that company. The broker now needs to find one share to land a job, he can look at few different places including his stock inventory and his client’s portfolios. He can also ask other brokers. After finding and selling the share on the market you gain profit adding money to your brokerage account. You will also have to pay a small fee for the right to borrow the stock.

Short selling is for advanced traders because they can be extremely risky if the financial situation of that company changes.

Another thing to pay attention when short stocking is to initiate a short position after the stock has fallen at least 50 percent from a previous high. This way you take out the risk of being in a short squeeze.

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So as you notice that certain stocks are freefalling that is the time to initiate your short investment, then all you have to do is hold them for 2-3 years until the company files bankruptcy. Investing in long that wall street doesn’t write research on is the best move to make. So basically targeting small, off the radar companies, that don’t have a lot of chances to succeed is the best way to go with short stocking.

It is logical that bigger companies will get out of a financial problem with less difficulties than some other smaller ones. Bigger companies stocks are worth more of course, but short moving on them is high to risky and is not recommendable for a couple of reasons.

They have higher chances to recover from financial downfall crisis, so there is no guarantee that you can earn on them. Also, it takes time, in some cases 3-4 years, for them to file bankruptcy in order for you to profit from them. So stick to smaller companies that are a safe bet, even though their stocks value less. They also take less time to go down filing a bankruptcy in the end.

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