Short selling


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Related to Short selling: hedging

Short selling

Establishing a market position by selling a security one does not own in anticipation of the price of that security falling.

Short Sale

The sale of borrowed securities. In a short sale, one borrows securities, usually from a brokerage, and sells them. One then buys the same securities in order to repay the brokerage. Selling short is practiced if one believes that the price of a security will soon fall. That is, one expects to sell the borrowed securities at a higher price than the price at which one will buy in order to return the securities. Selling short is one of the most common practices of hedge funds. This is also called establishing a bear position. See also: Margin account.
References in periodicals archive ?
With this example, we can pretty much reconstruct the short selling process of short-sellers.
If the fundamental price is truly 20 percent below the previous closing while the rule discourages short selling after a 10 percent drop, buyers at that price may end up losing 10 percent of their investment.
In May, German financial regulator BaFin banned naked short selling on a number of securities in a bid to curb speculative trading.
ASIC also encourages short sellers and system developers to continue to monitor ASIC Information Sheet 98 Short selling, which includes key tasks and practical information they must be aware of prior to the start date for the new reporting requirements.