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Posted On: 12/27/2019 11:48:37 AM
Post# of 86178
Yes, a short sale means you are betting the price will drop, so you sell high first, then after it drops you buy low.
That's how it's supposed to work. But if you sell first, and then the stock rises now you've sold low and have to buy high....not what you want to happen.
There is no limit to how much money can be lost from a short sale. The stock can always keep going and going up, bringing you further and further out of the money.
That's why there is sometimes a panic buy back when a lot of people are short and the stock rises. People need to flatten out their positions regardless of cost.
Look at the chart for MRK yesterday. EOD is a perfect example of a short squeeze.
That's how it's supposed to work. But if you sell first, and then the stock rises now you've sold low and have to buy high....not what you want to happen.
There is no limit to how much money can be lost from a short sale. The stock can always keep going and going up, bringing you further and further out of the money.
That's why there is sometimes a panic buy back when a lot of people are short and the stock rises. People need to flatten out their positions regardless of cost.
Look at the chart for MRK yesterday. EOD is a perfect example of a short squeeze.
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