What is short selling means with regards to the stock market?
- Thread starter shyam.trivedi
- Start date
Basically it represents a sale of stocks you don’t actually own. You borrow the shares from someone else with understanding you will return them later, and then you will sell them, short selling is the bet that stock is currently overvalued and its going to drop in price, Reliance mutual fund is one of the best portal that provide you the best information.
It means you are selling something you do not own in hopes of buying it back cheaper at a later time.
eg: Sell today (STO) @ 12.51 then Buy later (BTC) @ 12.00 a downward movement in the stock would result a cheaper price for you to BTC.
This is all naked selling and that is a dangerous game to play without using protection. Which is where Options become a great tool to trade.
eg: Sell today (STO) @ 12.51 then Buy later (BTC) @ 12.00 a downward movement in the stock would result a cheaper price for you to BTC.
This is all naked selling and that is a dangerous game to play without using protection. Which is where Options become a great tool to trade.
Thanks buddy..But now question arise for me is how to protect ?
I am new in trading I also want to know about stop loss..But i don't how to implement..
So want need help from you guys..I attached image and shown position A and
Position B..So need help on it which price I should put in that..
Suppose I want to Sell share at 100 Rs and what to Put stop loss on 106 and
want to set target 96 so how should I proceed ?
Help will be really appreciate :thumb:
I am new in trading I also want to know about stop loss..But i don't how to implement..
So want need help from you guys..I attached image and shown position A and
Position B..So need help on it which price I should put in that..
Suppose I want to Sell share at 100 Rs and what to Put stop loss on 106 and
want to set target 96 so how should I proceed ?
Help will be really appreciate :thumb:
Attachments
That is the correct way but you are not taking much profit in comparison to the risk amount. Take profit with the use of a trailstop perhaps rather than just a limit order. As for your order book I am unfamiliar with that I am sure someone else can assist you, but seeing you don't know then you should be trying this in a Virtual trade and not a live position in which case trial and error should see you figure it out.
Selling short is a very risky way to trade if you do not fully understand what you are doing as the markets go lower something like 60% of the time.
Selling short is a very risky way to trade if you do not fully understand what you are doing as the markets go lower something like 60% of the time.
@Jitu80
We can not put two orders (sell + buy) at the same time. Not in our exchanges in India. First you have to short the scrip @ 100 with Limit order. No trigger required. Once the order is executed, you put a stop loss buy order to cover your position.
Here you have two scenarios.
1) to protect your capital. Depending on how much you willing to loose to get this trade into profit. Risk management. So, assuming LTP is @ 100 currently, you place stop loss buy order with trigger @ 106 and Limit @ 106 or higher.
If the trade moves against you, your capital will be protected.
2) Now if the price continues to go down (as you expected), just put a buy Limit order @ 96 and cover your short sell.
And the third way of doing it is Trailing Stop loss.
Two things you have to remember for a stop loss order is (this is where most of the confusion is)
For a stop loss buy order LTP should be lesser than your trigger.
For a stop loss sell order LTP should be higher than your trigger.
We can not put two orders (sell + buy) at the same time. Not in our exchanges in India. First you have to short the scrip @ 100 with Limit order. No trigger required. Once the order is executed, you put a stop loss buy order to cover your position.
Here you have two scenarios.
1) to protect your capital. Depending on how much you willing to loose to get this trade into profit. Risk management. So, assuming LTP is @ 100 currently, you place stop loss buy order with trigger @ 106 and Limit @ 106 or higher.
If the trade moves against you, your capital will be protected.
2) Now if the price continues to go down (as you expected), just put a buy Limit order @ 96 and cover your short sell.
And the third way of doing it is Trailing Stop loss.
Two things you have to remember for a stop loss order is (this is where most of the confusion is)
For a stop loss buy order LTP should be lesser than your trigger.
For a stop loss sell order LTP should be higher than your trigger.
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