A short selling is one of the most attractive ways of trading in the stock trade business. Everyone in the market seeks to master it, but nothing worth having comes easy. There are multiple disadvantages and reasons for the hamper that can leave well-to-do traders in a catastrophic state.
The downside of short sell
- There is a chance of the stockbroker recalling the borrowed stock when the short seller’s control on their position covering price becomes limited.
- Borrowing stocks for the process can prove to be a tough job to accomplish.
- Liquid stocks tend to be expensive
- There is theoretically no limit to the loss that one may have to suffer if the bet is lost.
Possible factors of restrain
- Something as simple as an announcement of the company merging with another body can shoot up the price.
- The circumstance of the global economy can be suddenly unpredictable sometimes.
- With a perception that the stock is undervalued, a more reputed investor might take a large stock position.
The right way to master
The guaranteed road to its mastery is through continuous learning. All the legitimate sharks in the business have come a long way down the path. Research, observe, learn, and implicate.