Understanding Short Selling 

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Trading is not nearly as scary as it seems, you just gotta understand risk to reward ratio and have a solid trade defense

1) Borrow someone’s candy 2) sell the candy for 1.00 3) buy back the candy later for 0.70 4) return the candy bar that you borrowed Sounds like the trading system in Fable

Hello everyone here because of gamestop

Best way to explain what a Short is Silver is at $20 an oz. I think it's going to go down I borrow 1 oz of silver from Phillip I sell it on the market place for $20 I now have 1 oz silver debt and $20 cash I wait for silver to be valued at a different price, let's say it goes to $15 I buy an oz of silver for $15 from Henry. I now have $5, an oz of silver and 1 oz silver debt to Phillip I give Phillip the oz of silver and I have $5 left over Jesus Christ is LORD

Shorted a percentage of my T$LA holdings, but I'm retaining a portion for the long term. Tesla's growth potential remains robust. I'm considering diversifying my 250K portfolio, but I'm uncertain about managing risks in my next move.

In layman's terms: you borrow $100 and promise to pay back with 1 stock which at the time is worth $100. The stock loses its value, so when you have to pay back, you buy a stock which is now worth $70 and give the low value stock back as payment, which doesn't matter because you didn't promise to give back a stock of the same value, just that you will give back 1 stock. You borrowed $100 and paid back $70 (+ broker fee). If the stock you need to pay back with increases its value, then you need to buy it at a higher price than $100 and you make a loss & have to pay the broker's fee anyway. Moral of the story: be the broker.

This explanation is great, but the whole concept just cracks me up. Selling something that doesn't belong to you in the hopes that it goes down in value 😂

It's like someone borrowing you an iPhone and saying give me back an iPhone in 6 months time, so you would sell the iPhone now and buy another one in 6 month's time when it's cheaper and then give that one back to the person. You've basically sold something that you didnt own, you "borrowed" it, and you would have signed a contract to agree you will return an iPhone and therefore there is not limit to how much you can lose because you will need to return the iPhone (Stock) in 6 months regardless of how much it costs. Edit: I used an iPhone as an example, which is of course guaranteed to go down in value over time, where as a stock can rise and fall.

Yeah, I had to literally play it out with actual objects in order to understand it. I did it like this: Your friend has a cellphone worth $100, you ask him if you can borrow it. You sell it to your Dad for $100. Your Dad gives you $100. The value of the cellphone drops to $50 next week. You buy the phone back from your Dad for $50. You give the phone back to your friend. You're left with $50 and your friend has no clue what you did!

Yo, Game Stop’s got me learning how to stock market!

This was by far the best video on explaining what going short is. I was watching all these other beginner videos and it didn’t click. They didn’t explain the whole selling part that well, but you cleared it up so effortlessly. Thank you!

who here after weird shit about gamestop and stock market, but too dumb to understand it?

I wasn't financial free until my 40’s and I’m still in my 40’s, bought my third house already, earn on a monthly through passive income, and got 4 out of 5 goals, just hope it encourages someone that it doesn’t matter if you don’t have any of them right now, you can start TODAY regardless your age INVEST and change your future! Investing in the financial market is a grand choice I made.

The most important part is how this "borrowing" works. Everything else is pretty self explanatory. Unfortunately, this video doesn't actually explain anything… 🤔

HOLD THE LINE

Whos here from GME😂

Should have watched this video before watching the movie ' The Big Short".

When the comment section makes more sense then the video

Strategies and moves like this aren't for every account. Pattern recognition, stock picking, when to buy or sell, entry and exit points? A few must knows for every newbie before getting around to placing a trade, Don't rush the process. I started profiting from the market when I discovered a better and more effective way to trade and make money. I'll be on to seven figures by years end. Kudos

You are a true genius in breaking down the somewhat confusing concept of shorting into the best, simplistic and straight forward example I have ever seen.

Thank you for finally explaining the mechanism of a short sell. I have read and watched so many descriptions that stop at "it's betting against a stock" that I was beginning to believe that no one actually knew how it worked.

I just tried to watch a video from the plain bagel on shorting....it was convoluted as hell. This made things so much more simple. THANK YOU

Nice Concept. Understanding the market took me a lot of losses and mistakes to get to where I am. One of the best clues I was given was to participate in a portfolio where I can invest in long term commodities that generate a great percentage of profit. It kept me away from losses, it still does Till now.

Hey there, It get's a little bit technical, but basically you are required by your broker (electronic or not) to pay all realized losses through a "margin call". That basically means once your cash level dips below a certain point, they will force you to add cash to your account or will liquidate your positions for you. To make a long story short, always be careful and put stop losses on your shorts! Hope that made sense :)

I swear man, you guys have the best, easy to understand videos. Make tons more please.

This is supper relevant right now cause the Wall Street bets subreddit. A bunch of them short sold GameStop a year ago(start of carona their stock was at 3.40 a share) and it payed of making multiple of them multi millionaires.

Short selling is borrowing someone's stock and selling it while the price is still high ($100 right now). Eventually you have to return the stock, right? So when the stock is down, you buy the stock for $70 and return it. You sold it for $100, bought it and returned it for $70. You made a $30 profit. Also, when a dividend comes rolling out, the person you sold the stock to is going to get it. But the problem is that the person you borrowed the stock from doesn't actually know you borrowed it from him, so he's expecting a dividend. This is why you have to pay him the dividend if the company decides to issue one while you're in the process of shorting.

I'm just glad someone got the reference :). Really glad you enjoyed it!

Short selling is when you sell a stock you don't own at let's say $100, and then you buy it later for $70? But you profit $30???? I don't understand this

Thanks for using GNB in the example :D

I'm here after trying to search for "short sellers complain" GME 🚀🚀🚀🚀

Just wanted to say thanks for creating this video. I like how you explained it with the pictures and you speak clearly. Thank you.

Who else watched 50 vids and still don’t get it

My brain hurts trying to understand this. I think, though, I finally got it. The key to understanding it is BORROWING -- and not borrowing a fixed amount (you borrow $20, you pay back $20) but the stock price (which will likely be different the day you borrow it and the day you return it). You think a stock valued at $20 is going to go down. So you borrow the stock and sell it. In this case, what you borrowed sells at $20. One month later, you have to return the stock you borrowed. So you buy the stock. If the stock is valued lower than $20, you make money. The amount you make is the difference between the price of the stock when you borrowed it and the price of the stock when you returned it. How this is legal and gambling isn't, escapes me.

I thought I was a smart man but I am so confused lol 😂

Omg so this means the shorters can lose EVERYTHING this is so fucking crazy

Good video but there is still one aspect left un-answered - what happens during the "borrowing" of the stock to sell in the first place? Does the other client have to agree first for the broker to borrow a stock from his portfolio? Or does the broker have the power to make such decisions without consulting the owner?

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If you''re here because of the GME/WallStreetBets Short Squeeze, check out our new video: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-G-rUXQyKDVs.html

This is the only video that cleared my doubt . Thank you 😀

In very simple terms for Indians Today :1$ = 80rupees I lend 1$ Convert to 80 rupees Tomorrow 1$ = 40 rupees With 80 rupees i buy 2 $ Now paying the lend of 1 $ Now I have 1$ extra

The how i met your mother reference goes hard

Now I get it. it's purely brilliant.

@2:38 Yes you could lose if the price goes up. But your not going to sit on that stock. As soon as it starts going up you dump it. Limiting your loss.

In my experience as a trader, I have come to realize that working with an expert has it’s perks. Knowing when to go short and knowing when to go long are one of those.

I had to do mental gymnastics with this one. Basically, investor X borrows a share of stock from a broker and sells it. Later, investor x must purchase a share of the same stock in order to replace the share that was borrowed. Meaning, in this example, he borrowed at $100, sold it, then bought it back at $70 to replace it. Hence, he keeps $30.

But what happens to the broker's client, where he takes the share from? Doesn't the client lose money? And if so, why would they allow the broker to get a hold of the share?

Can you short stocks you already own. Does this make sense?

I get the concept but I'm curious as to how the broker can borrow a share from someone else's portfolio. Does the other person know that his stock is being shorted?

THIS VIDEO WAS AMAZING! Thank you so much for breaking it down like that! I spent hours on the internet reading my way out, and still found myself back to square one with no fucking clue what shorting was. Incredible.

haha! Love the reference to How I Met Your Mother (GNB). Thanks for the wealth of knowledge, too. Keep up the great work!

Thank you so much! Have seen so many videos where the presenter ASSUMES you know more than you do and I just feel stupid. You explained it in a much shorter video and I am beginning to now understand. Thank you again!

Do you realize GNB sounds a lot like GME! Confirmed: Wallstreet survivor predicted GameStops rise in the market.

very well explained, i was lucky to find this vídeo when studying for my financial markets exam! big thank u from Portugal!

It really is incredible that this is legal. I would consider it gambling, not investing. Very good explanation though.

Nice video. I think that since the risks of shorting outweigh its benefits, most people tend to steer clear of it.

I don't understand how you "borrow" a stock... Isn't "shorting" a stock just "selling" a stock high then buying back in when it goes lower? Why can't they just use normal fing English?

Best explanation I heard so far. Now it makes sense to me.

love the how i met your mother reference. GNB!!

Best explanation about short selling

What I don't understand: In this example, the broker 'borrows a stock from one of his clients'. Is this client aware of this? Does he consent? What if he wants to sell it while it is borrowed? This 'borrowing' part is the thing I don't understand about short selling. Why would someone let their stocks be borrowed by someone else?

The thing is, people buy things short all the time... If someone is having a wedding in SIX MONTHS and have a binding contract in advance to have the caterer serve lobster at a certain price... If the lobster price GOES UP the caterer may lose money. If the lobster price GOES DOWN the client may have spent more than Market values for lobster. But if a purchaser agrees on a fixed price in the future you hedged against the price increasing.

That was an extremely effective use of time.

The comment form TC explains it perfectly!

It just doesn't seem like it should be legal. Too much that can go wrong, or to susceptible to fraud, etc., imo.

So all this means is: 1) You have or buy stock at a price 2) The stock has gone up and now it might go down or it was stagnated and or going down and you sell before it drops even more 3) You get that money 4) That stock is even lower and you sold before it got that low 5) Reinvest it and it goes up or invest it somewhere else where it grows This just means when stock goes down sell to not loss, this is short-term stock investing and not long-term This also means you will pay withdrawal fees and taxes on the accounts you use to hold your portfolio because it's not long-term. Summery: You have stock, finances says it will go down, so you sell before that to avoid it going down, then reinvest in the same stock when it's at the right time and goes back up or invest in something else. You could otherwise ride the wave, meaning you don't pull out but you don't just leave it alone, you go a dollar / euro cost averaging deposit investment in that stock no matter the stock market position. This is of course if the stocks / company don't go bust and you investment / money is insured, meaning the insurance that insures you money needs to have enough money for everyone's else money to be insured. ALOT RIGHT ? But this is just logic. This is why CFD / Day traders / traders loss so much money, and why 80% fail, all the emotions and confidence you get from some growth continues to boost your confidence and you take bigger investment and risks. The issue is you haven't diversified it.

Nice Video!! Very engaging from beginning to the end. Investment like forex and Crypto market. Is way better than any online investment 💯

How is that legal?

Yup here just to understand the GameStop shit.

Thanks! Hope you've checked out the rest of our channel. We release video about every 2 weeks, so keep posted!

thank you: I can know sort of understand episode 4 of Billions.

First video I’ve watched by you and imo very good.

i mean if you know the company will go down the next weeks, like VW or something, then its a good way to make money right?

The way I think of it is that your are basically reversing the rolls. Selling when you would have bought and buying when you would have sold creating a reverse effect.

"borrow" a stock without actually buying it??

this is the best explanation on short. appreciate it.

Short selling is designed for inside traders.

How can you sell something that is not yours ?

Nice HIMYM reference! (Also this has been helpful.) :P

So if GNB stock goes up to $120, then Jack would still have to buy it back on the market? Eventually, the stock needs to be returned to the portfolio of the broker's client, so is there a time limit on the short sale?

What happens if you short a stock and the price plummets and it gets de-listed from the exchange. You can't buy it back, so I take it you just pocket the amount that the stock was on the day you shorted it, minus broker fees?

Perfectly simple explanation. Thanks!

Short sellings are good for pros thats why i can recommend Mr Rogan Colbert his strqtegy is superb

I understand “Trading Places” now!

Earning money consistently from trading isn't a myth. Probably you done it wrong all time around. Instead, try neat tips and see how much better you can progress.

So what does the first person gain by letting someone buy their stock in the first place? What chance is there for them to gain anything?

This is a clear explanation. I don't get the thumbs down at all. Thanks for the video.

Thanks for the simple example, I came here after several other videos that failed to explain it in a good manner like this. Websites like Investopedia assume that everyone will understand difficult financial terms!

Watching this to understand the airport attack in casino Royale.

You forgot the part where you have the first fund a sucker that will pay you the diff if the stock falls Or that you will pay him the difference if it goes up. Or get a broker and pay a hefty 5% comm

Now we know why it took them so long to figure out they should only give us $600.

most clear descriptions yet. Thank you

1:11 Does that mean Jack technically committed insider training, since the info./lead was private at first? #NewbQuestion hehe

I’m confused. You say “Jack sold GNB stock for $100 and bought it back for $70”. In this example when was the stock sold for $100? And who takes that $30 loss in this example?

Goliath National Bank & Gamestop Lovers ! What could I ask more !

What if during the short, the owner of the borrowed stock wants to sell the stock. Do they even know their stock is being lent to a short seller from their broker? Does this ever happen?

How's shorting even legal? Should be banned alltogether.

Excellent and informative videos, I'm keeping up on every new one published! Keep them comin'! Thanks

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