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Showing posts from July, 2017

My Favorite Strategy For Shorting Shares

This article contains a quick introduction to shorting shares then presents my favorite strategy for finding shorts. I then put this strategy to the test on historical data before finishing up with some final tips.
Shorting Stocks Explained


Short selling is the process of selling a stock that you do not already own.


The principle reason why you would want to do this is because you think the company is overvalued and you want to make a bet that it will decline in value in the future. You may also want to short a stock in order to hedge your other long positions.


While it can sound confusing to sell something that isn’t yours, just remember that short selling is part of a free, capitalist market and is made possible by brokers, who act as intermediaries between investors and the exchange.


When you want to short a stock, your broker will lend you the shares, either from it’s own inventory or one of it’s partners.


Once you borrow the shares from your broker you can sell them at the market pric…