what is short selling?

what is short selling?  it’s so simple. First sell when the price is high and when the price falls, then buy.First let’s understand a general transaction.
How does a general transaction takes take place? First you buy. Why do you buy? You feel that the prices will go up. That is why you buy. So first you buy. for exaple buy the stock at RS100 and you feel that the stock price is going to go up. That’s why you wait until it goes up. Assume it goes up to 120, right? Then what will happen? At 120, you will sell it off, correct? What is your profit? 10. Which is your selling price -100 which is your cost price. But chronologically what happened? 1st you bought at 100 then you sold 120. This is normal buying.when would you do such kind of a normal buying?When you are bullish on the market. When you feel that yes, markets will go up.

How can I earn money in falling markets.

How can I earn money in falling markets? So you feel that this stock is currently at, let’s say Rs150 right now. XYZ some stock is at Rs150 right now. And you feel that this stock will definitely come down to 120 letters is what you feel.
So what can you do? A normal person who doesn’t know short selling, he will wait and watch till the stock comes down to 120. And then he will enter at 120. But if you’re a smart investor, what will you do? You will sell first at 150. And when the price goes down at 120, you will buy. So what happened in this transaction? In this transaction, you sold something which you did not have And when the prices went down from 150 to 120, that is when you bought it back. For such a transaction, you need to place an mis order.So always remember this. Whenever you’re doing a short selling, place an mis order.

what is this mis order?

mis order-Margin intraday settlement.The word itself is it’s an intraday settlement. So what happens in an intraday settlement? You’re going to buy and sell both on the same day.It has to be done during the market. As only everyone knows that the market hours are from 9.15 in the morning to 3.30 in the afternoon. But please be aware that these MIS transactions are squared off by various brokers at their own time slots.

For Example First, it was -100 when you sold the quantity now plus 100 when you have bought it. So, what happened at the end of the day? At the end of the day, do you have to sell your shares to anyone? Do you have to buy it from anyone else? No. Final is zero position. What about this Rs10? This Rs10 would nothing be but your profit.

what is the key feature of short selling?

Sell high. And then when it goes low, then buy. So step number one is sell. Step number two is buy.

WHAT IS Auto square

example. The previous case which you were taking, that at Rs150, you had sold a specific stock.Like, there’ll be many brokers who will auto square it off at 310. So let’s take this as an example. The previous case which you were taking, that at Rs150, you had sold a specific stock.And unfortunately, it doesn’t come down, but it goes higher. It goes to 160. Are you at a loss now? Yes. How much? Lost Rs10 per share. Broker will automatically square it off at 310.

Sebi allows short selling in India?

So if that was done by a specific country, if a country bans short selling, then it will not be allowed. In fact, at that time there were great rumors that India also may ban short selling.

So had our government banned it, could it have been banned? Answer is yes. So how are we allowed to do short selling in India right now? Because it is allowed by our regulator. But what does our regulator say? Very important that you have to cover it within the same day. You have to do it as an intraday settlement.

In fact, in 2011, there were some countries like France, Spain, Italy and Belgium who had banned short selling.

Example, latest example. Let me take. During Corona time, China had banned short selling in some specific commodities in some indices.You also like to Read https://dailynewsasia.com/2022/12/22/best-online-job-apps-in-usa/

 

 

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