What is equity, selling short, and cover short? Please define what equity, sell short and cover the gaps in simple terms. Also, how do I increase my equity?
How do I go about selling and short covering short?
Please give examples if you can
If you ask these questions here, you do not "go about selling."
Equity is the value of assets beyond the liability for that asset.
Short selling involves borrowing shares from your broker in a margin account (approval required special broker) and is risky.
The short sale is a bet that the value of a security is in place so in future.
Selling first, then buy to close. The stock must be borrowed to be sold short. You must be allowed to sell short for many brokers. There is no more risky than buying long first, then the sale to close. Yes, the theoretical risk is unlimited, but the price of a stock is more likely to increase by multiples of the night he dropped a few cents overnight.
You increase your capital by making profitable trades - anyway.
Posted on February 14, 2010.
