Hi Jeroen,
re: shorting,
Leo gave you a good link, so I'll post my personal opinion about it.
1. You need to check if "shorting" is legal in your country first.
Some countries do not allow or do not have system to short.
2. You have to know about the company's history, strength, weakness,
management and most of all, company's product/stock cycle very well.
3. Naked shorting can cause unlimited loss when the stock goes up
without protection. It's wise to buy call options before you short it
until you have more experience. Buying options is not cheap, though.
4. In general, companies try hard to improve, so it's harder to make
money by shorting......
5. Most short sellers are well informed about the company. But
there're few groups of people who are making a living over "short
squeeze" too. They can make short sellers to deliver stocks or
money to force "short squeeze."
Otherwise, it can be used as another tool to make good money. Why
don't you practice on a paper for a few months ? You might like it.
I personally like to be on long side. It's just a personal choice.
Btw, try to avoid shorting a company when you have too much inside
information because most publics don't have them, so they can be very
bullish. Trend is more important than inside information for shorting,
imo.
Hope it helps!
BPP(Bipin's partner) |
