America On-Line: will it survive ...? Message Board

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Technology Stocks : America On-Line: will it survive ...?

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To: Jinping Shi who wrote (2328)	3/10/1997 4:57:00 PM
From: Xpiderman	of 13594

Short sellers sell stock they do not currently own(they borrow from their broker), and hope they can buy those sold shares back at lower price to return to the broker. When people establish a short position, they usually set a stop-loss limit to reduce the risk. When the stock price moves up by good news or early short covering, it will trigger more and more short covering, called short squeeze. If you long a stock the max you can loss is 100%, but if you short a wrong stock, you can lose more than 100%, 200%... Short sell can be used in many cases, most of them are short term trading related, so it's very important form the short-sells not to fight with the trend. Short selling can be very dangerous, there was several hedge funds (professionals) broke because of shorting IOM and AOL in early 1996. If they are in the wrong side of the market/trend, like what happened today, they buy shares back(hopefully below their cost) to return to the broker to close the short position. I have been there, I know the pain. Xy

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