What is short sell in stock market?

What is short sell? 

Short selling is an investment or trading strategy that predicts a decline in value in securities or other securities.  This is an advanced strategy that should be undertaken only by experienced traders and investors.  Everyday I make short sell at 9:15 and most of  the days I make profit with myself strategy. Traders can use a short sale as a speculator, and investors or portfolio managers can use it as a hedge against the downside risk of a long position in the same or related security.  Speculation carries the risk of substantial risk and is an advanced trading method. In a short sale, a position is opened by borrowing shares or other assets that the investor believes will decrease in value from a set future date: the expiration date.  The investor then sells these borrowed shares to buyers willing to pay the market price.  Before returning the loaned shares, the trader is betting that the price will continue to fall and they can buy them at a lower price.  The risk of loss in a short sale is theoretically unlimited, as the price of any asset can rise to infinity.  The key to short selling is when an investor borrows a security and sells it on the open market, later planning to buy it for less money.  Short sellers gamble and profit from a fall on a security value.  Short sell have a high risk / reward ratio.it can give very good profits, but losses can increase quickly and infinitely.

Short sell for profit

 A trader who believes that XYZ stock, currently ₹ 50, will decline in price .They borrow 100 shares and sell them to another investor.  The trader already owns "short" 100 shares, because he sold something he did not own, but took a loan.  Short sale was possible only by borrowing shares, which may not always be available if the stock is already strictly short by other traders.  A week later, the company, whose shares were short-reported, had tragic financial results for the quarter, and the stock fell to ₹ 40.  The trader decided to close the short position and bought 100 shares in the open market for ₹ 40.  Lended the shares.  The trader's profit on short sales, excluding commissions and interest on the margin account, is ₹ 1,000.[ {(₹ 50 - ₹ 40) = ₹ 10} x 100 shares = ₹ 1,000]. 

Short selling for loss using the above scenario, suppose the trader did not close the short position at ₹ 40, but instead decided to leave it open for additional price declines.  However, a competitor exits the company with an acquisition bid of ₹ 65 per share and the stock sinks.  If the trader decides to close the short position at ₹ 65, the loss on the short sale will be ₹ 1,500: [{(₹ 65 - ₹ 50) =₹ 15} x 100 shares = ₹ 1,500 loss].  Here, the trader had to buy back the shares at a significantly higher price to cover his position.  Short sales as a hedge from speculation, short sales have other useful coverage, often regarded as the lowest risk and most respectable avatar.  The main purpose of a hedge is security, as opposed to the pure motivation of speculation profits.  Hedges are made in the portfolio to protect profits or reduce losses, but since it is at significant cost, the vast majority of retail investors do not consider it during normal times.  Coverage costs double.  There is a real cost to cover in coverage, such as expenses associated with short sales, or premiums paid for security option contracts.  In addition, if the market continues to move forward, there is an opportunity cost to withdraw from the portfolio.  As a simple example, if 50% of a portfolio that has a close relationship with the S&P 500 index (S&P 500), and the index moves 15% over the next 12 months, the portfolio will only record around that profit.  Half or 7.5%.  The pros and cons of short selling shorts can be costly if the seller makes a miscalculation about the price movement.  A trader who has purchased a stock may lose only 100% of his outlay if the stock runs at zero.  However, a trader who has less stock may lose more than 100% of his original investment.  The risk comes because there is no sealing for the price of a stock, it can rise to infinity and beyond the coin to phrase another comic character Buzz Lightyear.  In addition, when the action was taken, the merchant had to finance the margin account.  Even if everything goes well, traders will have to figure out the margin interest cost when calculating their earnings.  High Profit Potential Small Initial Capital Required Leverage Investment Against Other Potentials Potentially Unlimited Losses Against Potential Hedges Margin Account Required Margin Interest Needed When the time comes to close a position, a short seller needs to find enough stock  There may be trouble to buy: if in the market, or to sell a particular stock, very much the opposite, and  Buyer may get stuck in small loop, seems to touch the sky.  On the other hand, high-risk strategies also provide high-performance reward.  Short selling is no exception.  If the seller predicts that the price is moving correctly, they can offer a systematic return on investment (ROI), mainly if they use the margin to start trading.  The use of margin provides leverage, meaning that the trader did not have to support his capital as much as the initial investment.  If done carefully, short selling can be a cheaper form of hedging, which provides counterweight to other portfolio holdings.  Initial investors should generally avoid short sales unless they have more trading experience under their belt.  He said, short selling through ETFs is a somewhat safer strategy due to the lower risk of a brief squeeze.  Additional Risk for Short Selling In addition to the above risk of losing money in stock price trading, short selling has additional risks that investors should consider.  Less use of less borrowed funds is known as margin trading.  When sales are cut, you open a margin account, which allows you to borrow money from a brokerage firm using your investment as collateral.  Like when you spend a lot of time on margins, it is easy for the loss of hands to pass because you have to meet the minimum maintenance requirement of 25%.  If your account falls below this, you will be subject to a margin call and will be forced to cash in or liquidate your position.  Wrong time Even if a company is overvalued, it may take some time for its share price to fall.  Meanwhile, you are vulnerable to interest, margin calls and calls.  Brief Squeeze If an action is actively cut with a high level of float and days to cover the relationship, you are also at risk of experiencing a brief squeeze.  A brief squeeze occurs when a stock begins to rise, and short sellers hedge their trades by purchasing their short positions.  This purchase can become a feedback loop.  Stock demand attracts more buyers, pushing stock more, allowing even the best sellers to buy back or cover their positions, even from short sellers.  Regulatory Risk Regulators may sometimes ban short sales in a specific area or even in the broader market to avoid unfair and panic selling pressures.  Such stocks can lead to a steep jump in stock prices, forcing the short seller to hold lower positions in heavy losses.  Going against the history of the trend has shown that stocks generally move upward.  Over the long run, most stocks appreciate in value.  For that matter, even if a company hardly improves over the years, the rate of inflation or price rise in the economy should give a slight boost to its purchase price.  This means that the short is betting against the general direction of the market.  Short Sale Costs Unlike buying and holding stocks or investments, short selling involves significant costs, in addition to the normal trading fees paid to the broker.  Some of the costs include: Interest on Margin Interest can be a significant expense when trading on margin stocks.  Since short sales can only be made through margin accounts, interest payable on short trades may increase over time, especially if short positions are kept open for an extended period.  Stock Borrower Costs Stocks that are difficult to borrow, due to high short interest, limited float or for any other reason, have a "hard to borrow" rate that can be quite substantial.  The fee is based on an annual rate that can be up to a small fraction of more than 100% of the value of the small business and is provided according to the number of days when the small trade is open.  As the borrowed rate can fluctuate greatly from day to day and even intra-monthly, the exact amount of the fee may not be known in advance.  The fee is usually determined by the broker's broker in the customer's account, at the end of the month or at the end of the short trade and if it is sufficiently large, it can make a big dent in the profit of a small business or  It was a loss.  Dividend and Other Payments The short seller is responsible for paying dividends on the short stock to the entity from which the stock has been loaned.  Short sellers are also on the hook for making payments due to other events involving short action, such as stock splits, splits, and bonus action issues, all of which are unexpected events.  Short sale metrics are the metrics of two metrics used to track short sale activity on a stock: Short interest ratio (SIR) —Losso known as short float: measures the ratio of a stock to the current  The number of shares available or "floating" on the market is deducted in comparison.  A very tall man is associated with actions that are falling or actions that seem to be overvalued.  Brief interest to volume ratio, also known as days of relationship hedging: The total stock was less divided by the average daily trading volume of the stock.  A higher price for cover days, the ratio is also a bearish signal for a stock.