Is short selling only for intraday?

What does it mean to short?

In finance, being short is an asset means investing in such a way that the investor will profit if the value of the asset falls. In a layman language, to short means, a trader sells security with an intention or knowledge that the price or value of the security is likely to fall in future.

What is short selling?

Short selling is selling equity shares that are not owned by the seller. These shares are lent to the seller by a broker with a promise that they will be delivered back to the broker at the time of the settlement. In short selling, a position is opened by borrowing shares of a stock or other asset whose value as per seller judgement will fall in future.

Going short means selling. In short selling or shorting we sell first and buy later. The short positions cannot be carried overnight in the spot market. The short trade is profitable only when the closing price is lower than the price at which one has shorted or the entry price, if not then there will be losses and such loss is termed as stop loss.

So, is short selling only for intraday?

Largely yes! Short selling can be executed with intraday trading. Thus, if one sells stock in the morning, then he is required to buy it by the end of the day or before the market closes. Well, it is pertinent to note that if one fails to square off its positions that is to say one fails to buy back the sold stock by the end of the day then you will be penalized by NSE or SEBI.

Different types of trading strategies work in different market conditions. In a bearish market when the price of the stock goes down one can still make profits out of it. Short selling is nothing but a term given to such selling techniques.

Generally, traders earn more by short selling in the share market. But in case of lack of knowledge or experience, before you enter any transaction which you are not sure about, you could take intraday trading tips. You can ask your broker or any experienced person for guidance. This will save you from incurring any losses or get penalized for any unfulfilled or in-squared transaction.

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