| Term | Meaning | Example |
|---|---|---|
| Shorting | Selling a security not owned with the intention of buying it back later at a lower price. | Client says they want to short a # shares of a stock Broker borrows # shares from clients Broker then sells the # shares for client and puts the money in the client's account. |
Covering a Short Covering his Position |
| If the price drops, the client tells broker to cover his short. Broker buys # shares from market at the current price using the client's money. Broker returns the share to the client from which it was borrowed. Client make a profit of the difference. |
Going Long Long Position | Owning an asset with the expectation that its value will rise. | Buy a stock with the intention that it will increase in value. |
References
| Reference | URL |
|---|---|
| Understanding Short Selling | https://www.youtube.com/watch?v=Z1LctxzEREE |
| How Short Selling Works (Short Selling for Beginners) | https://www.youtube.com/watch?v=7PMzjnwQlaM |