PTG the question againLast night I found someone, said he was shorting INT and now he is long, I asked him how the short sell works and there were many posts back and forth between me and him his answer is not convincing me, and when I said that someone told him to ignore me and he answered saying he doesn’t know exactly what I am talking about. Just minutes ago I found a website with many links on it about short selling, so far what I found did not indicate I could be right, but it indicated that he is right on what he said.
Until I found this one:
Uses Leverage
Because short selling is done in a margin account, the trader uses leverage to increase profits (or accelerate losses if the trade goes bad).
https://stocks.about.com/od/advancedtrading/a/081208naked.htm
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Here is a copy of his last post.
RE: RE: RE: RE: RE: RE: RE: RE: i am long this pig
Mktneverlies38 3
6/19/2011 2:16:30 AM | | 225 reads | Post #29874625
if the stock is trading at 1.23 and i want to short... I have 500k in my acct, i tell my broker, short me 100k shs @ mkt.... I get my fill and watch the mkt... it really is not complicated... it is equal to buying stock.... Do you get it? Stop making it a bigger deal than it is!!!!
That said my fill has to be on an uptick!
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I thought short selling is somehow working like Forex trading, but of course not 50:1. May be 2:1, or 3:1, I mean there is leverage (margin) which may allow you to use one buck to short more than one share when the share price is one buck, that means it amplifies your profits as well as your losses.
Still I cannot verify, and this website is not really helping much because when I read I thought IU was wrong and there is no such thing like leverage, but when I read what is on the above link I got confused.
If I do not find answer I will call my broker and ask,
Bujt still I hope you may provide a correct answer with example of shortiung a stock when the avarage short price is one buck using all the cash assuming it is 100K dollars and margin whatever you assume.
Be nice and do not find excuses for not answering in direct way.