Online stock trading can be exciting. For most speculators the fascination lies in the opportunity to make much money in a short time period. While most of these stock traders bet on rising stock prices, there are others who make money when the stock crashes.
When you start out with stock trading then you will soon come across the terms going long or short in a stock. Going long means you buy a stock in the hope the share price will go up to make a profit. This is the most common stock play in the market.
Going short in a stock is the opposite. It means that you sell stocks that you do not have yet in the hope to buy them back later to a lower price. Buying the stocks later is also called covering the stock.
When you go short for the first time it feels a bit strange. You sell something you do not have. However, it is just a push of a button to go long or short. It is all electronic. The problem is not that it is difficult to do, there are other rules for playing shorts.
First of all there are many people who believe it is unethical to bet on falling share prices. It is against the common hope and believe that people should invest in stocks so that the companies get money, make money and all share holders prosper. Going short means to sabotage this idea. Hoping that the stock price goes down is therefore the same thing as hoping that the company will fail.
However, stocks have always went up and own all times. It is part of the game. I do not believe that it is unethical to go short. It is not possible to bankrupt a company when everybody goes short. There is always a real and true value of stock shares, no matter how many people go long an short. If you go short then you have to buy the shares back later anyway. You provide liquidity and volume to the stock market as a shorter.
Whatever your believe is, going short is very common and every online broker today offers this possibility to you. As long the broker has shares available, which you can find out through your trading platform, you can go short anytime.
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David A. Sorenger is an expert author on stock market related topics. His articles about stock trading, online stock brokers, stock options and penny stocks have been published on numerous web sites, forums, blogs and e-zines all over the Internet.
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