Short Selling: Hello Friends, if you know about the share market, then Short Selling will be a well-known word and you may have heard it before. But did you know that short selling can make money.
Yes, Short Selling There is such a way that you can earn money from falling market, now after hearing this you must have thought that till now we have heard that whenever If the price of a purchased share increases, then there is a profit, but what is the way in which profit is made even if the price of the share falls.
So friends tell you that this is a very popular way through which many people earn money. If you also want to earn money in this way, then definitely read this article till the end, here we are going to give you all the information related to short selling
In which we will tell you what is short selling( What Is Short Selling In Hindi), why short selling is done and how to earn money by doing short selling, apart from this we will give you the benefits of short selling. And will also tell about more disadvantages.
So let’s know what is short selling and why is short selling .
- 1 What is Short Selling?
- 2 Why Short Selling is done?
- 3 What is Short Selling in Share Market?
- 4 How to Make Money by Short Selling?
- 5 Advantages and Disadvantages of Short Selling
- 6 Advantages of Short Selling
- 7 Disadvantages of Short Selling
- 8 Short Sell How can this be done?
- 9 Future & What is Option Short Selling?
- 10 Risk in Short Selling
- 11 Why are there auctions in Short Selling?
- 12 Conclusion
What is Short Selling?
In share market investor invests to earn money. In which he invests money from the share market in two ways. One for Long Term Investment and the other for Short Term Investment, Short Selling Short Term Investment is the way to make money.
In Short Selling, when you think that the price of a share is going to fall, then you take that share from your stockbroker and sell it in the market and when the price of that share falls, it is taken from the stockbroker. Shares give it back.
If an investor in the stock market wants to make profit in a short period, then he adopts the method of short selling. This type of investment is done when the investor has a high probability of the market going down.
Similarly, long-term investors invest when they expect a stock price to rise more in the future. In this way, they benefit when the market goes up in Long Term Investment and short sellers
With short selling, you are able to earn money only when the price of that stock has come down, which you have sold in the share market by borrowing it from a stockbroker. If the price of that stock had not decreased, then you would not have made a profit.
Suppose you guess Tata Motor The share price of Tata Motors is about to fall, in such a situation, you take the shares from your stockbroker and sell them in the market and after a few days when the share price of Tata Motors falls. If so, now you buy those shares at the fallen price and give them to the stockbroker.
If you bought 100 shares of your Tata Motor in which the price of one share was Rs 100 and after a few days the price of that share becomes Rs 80, then now you have to buy that share at the price of 80 and return it to the stockbroker.
In this, you took your total 10000 shares and sold them in the market and after falling the price of the share, you bought the same shares for 8000 and gave them to a stock broker, then you got a total profit of 2000 rupees.
Why Short Selling is done?
Many people want to know why Short Selling We want to tell you, that investors in Short Selling do to take advantage of the fall in the share price. In which any share or its stock is sold when its price has increased and there is a high probability of it going down.
In this way the shares are sold by borrowing from the broker and the trader buys back the stock as soon as the stock price comes down, which benefits the investor. This whole process is called Short Selling and it is done to get profit in less time.
In general, to make money in the share market, we first buy shares and when their price increases, we sell them, which makes us profit, but in short selling, we sell the first share in the market at a higher price. And when their price goes down, we buy them back.
Whenever the investor sells the shares at an increased price and buys them again at a reduced price, the investor gains in the margin between them.
The trader takes this stock from the broker who gets his position short and when the trader gives this stock back to the broker, then he squares off his position, it is also called Settlement Zero. In this, the position of the trader becomes exactly the same as it was before taking the stock. In this position the trader can again short sell.
The difference between buying and selling investor’s shares is considered to be profit and loss, if the investor sells shares for more and buys for work then he will make profit.
Friends above we have known what is Short Selling, now we will know how to earn money by doing Short Selling.
How to Make Money by Short Selling?
In the stock market All people earn money when the price increases, we all know that by buying shares at cheap price, selling them at expensive prices and earning profit.
In the same way, profit can also be earned by selling shares at a cheap price in the stock market, when its value declines.
understood in simple language, shares are sold when the price is high and they are bought back when the price falls, in this way the investor gets the benefit of the difference between the prices and in this way Money is earned by short selling.
Important Information: Friends if you want to earn money by short selling then you must have a Demat account if you do not know what is Demat Account then you must first Must know about account.
Short Selling can be understood in this way with the help of an example.
Suppose that if you see the shares of Mahindra Industries in the stock market in today’s time, whose price is close to Rs 2400. In some time its price increases to Rs 2430, but you know that today the market is more likely to fall, then you can sell Mahindra shares at the price of 2430.
After this you see that till the market closes, its share price comes up to Rs 2400, then you can buy in share for 2400. In this way, you get a profit of Rs 30 per share in a single day and you can take a good profit from the market by doing Short Selling
Friends, we have discussed many things about Short Selling in this article like What is Short Selling and how to earn money by Short Selling, but now we will talk about the advantages and disadvantages of Short Selling. will learn about.
Advantages and Disadvantages of Short Selling
You are exposed to risk on all investments in
share market In this you may have to take both advantage and disadvantage. In the same way, if we talk about Short Selling , then you have both advantages and disadvantages in this. Short Selling There are some advantages too There is also loss. Let us understand in detail about all its advantages and disadvantages.
Advantages of Short Selling
- Short Selling Market
- It improves the current stock value.
- Through this you can earn good money even in the falling market.
- Trading of the shares taken can be done by taking positions on margin.
- You can get better returns in less time.
Disadvantages of Short Selling
stock market is creating risk on every type of trading similarly, investor may have to suffer loss on short selling. Short selling also includes some disadvantages, such as –
- In short selling you get unlimited risk, as the chances of any stock going up can be unlimited.
- If the price of the share you sold keeps on increasing, then the trader can incur heavy losses from it.
- Through this, volatility of share prices in the market is created, which can be harmful for Short Selling The use of
- Short Selling At times promotes fraud trading techniques by brokers in the stock market. In
- Short Selling you can not hold the stock for a long time, as it may have high risk.
Short Sell How can this be done?
Tell you that Short selling is mainly done in two types. In which the investor receives profit or loss.
#1. Intraday Short Selling/ Intraday Short Selling
Intraday short selling is the most preferred, in this you do not need to hold your shares. This type of trade is closed on the same day and Profit and Loss is in front of you. This type of selling is done from 9.15 in the morning when the market starts to the time when the market ends in the evening.
In Intraday Short Selling you have to sell the stock in any session and buy the stock back and give it to the stockbroker before the stock market is closed. In this, you buy and sell on the same day the day the market opens.
#2. F&O Market Short Selling/F&O Market Short Selling
F&O Market Short Selling You can short your position for three months if you think that the share price of a company is going to fall after a month then you can do that. You can short your position by selling the shares today and within three months you can buy back those shares and give them to the stock broker and hold your position.
Future & In option market short selling you have to hold your position before expiry. In this type of selling the trade is as per Share landing and borrowing mechanism . In this, you keep your position for a long time and you can keep your position short till the expiry.
Future & What is Option Short Selling?
Future & Option Short Selling is done by a lot of people, it is most popular in the market. In this you can easily clear your short selling position along with Intraday.
Future Short Selling – When we make our investment in the Future segment, it is called Future Short Selling goes. This type of selling is capable of providing unlimited profit potential. In addition, there is no risk limit for trade value. Future selling Concept of “High Risk-High Return” is done together.
Option Short Selling – This type of trading is done with Option shares in the share market. In this option selling price is higher than the market price of the future, then the investor starts earning more profit. In this, you get many types of options, in which the investor can trade. In this type of selling, the market price of the option keeps on decreasing, so the profit keeps increasing.
These things should be kept in mind in Short Selling
It is important to keep some things in mind before doing short selling because it can also cause huge loss to the investor.
- If you want to do short selling of a share, do complete research about it, if you have any doubts about that stock, then do not do short selling in such shares.
- If you want to do short selling in a company in whose business people are taking interest, then you should not invest in such shares because the share price of such companies keeps on increasing.
- If any bill or The budget is about to come and you think that the bill will not be all right for the business, then you can do short selling in such shares whose business can be affected by that budget or bill.
Friends knowing us we can earn good money in short selling but now we will know what are the risks involved in short selling and why auctions take place in short selling.
Risk in Short Selling
Share market Comes with risk, if you make any kind of investment in this, then you get risk associated in it, in the same way you get risk in short selling. Like –
- Short selling carries a high level of risk, as it is done for a short period of time.
- In this you take the shares and if the price of that share increases then You have to buy and pay the shares in expensive, so there is no limit on the loss.
- There are other types of risks involved in this type of trading.
- In this type of trading you do not get the research time to detect shorting, which can sometimes lead to losses.
- If the market moves more in the opposite direction than usual, then your chances of loss remain high.
- It comes with high return and high risk.
Why are there auctions in Short Selling?
In Short Selling Auction condition is created when we are not able to buy the sold shares within the specified period and the market is closed. In this situation, the stock broker buys back that share with the help of auction and the difference in the price difference is recovered from the investor. In this situation there is a possibility of both profit and loss.
Under this, the investor necessarily auctions the shares to eliminate the share delivery obligation. Here the first responsibility lies with the investor, to repurchase the sold shares, but when an investor does not voluntarily do so according to the rules of the market and (stock exchange) Its shares are auctioned as per the rules and thus the deal of Short Selling is terminated.
If you also want to earn money through Short Selling , then for this you need good expertise and technical analysis and you Share Market Books Without any research Short Selling You may have to suffer loss. That’s why you must do research before investing.
So friends, I hope you have understood the complete information about What Is Short Selling, if you have any question or suggestion related to this article, then you can tell us by commenting and if you like this article If you have come, do share it with your friends.