Читать книгу Candlestick Charting For Dummies - Russell Rhoads - Страница 35

One of the best-known trading adages is “Buy low, sell high” — the simplest way to turn a profit in a market. But other ways exist, including short selling or shorting a security. This somewhat-counterintuitive process involves selling a security and buying it back later. Traders who practice this strategy are known as shorts.

The mechanics of selling short can be fairly complex, but I’ll try to sum them up:

1 A short borrows a stock from a bank that holds it for the owners, expecting the price of the stock to go down.

2 The short sells the borrowed stock to a buyer.

3 When the stock price drops, the short buys the stock back, returns it to the bank at the original (higher) price, and pockets the difference.

Shorts get a bum rap and are often accused of being responsible when a stock trades lower. Companies have even sued shorts on claims that they spread negative rumors to drive down the company’s stock price. But short sellers are really just part of the overall market mechanism, and they can actually help keep companies honest, because they’re constantly on the lookout for companies with deteriorating fundaments or evidence of suspicious accounting.

Once again, a trader who studies candlestick charts and patterns can easily spot this change. Such a momentum shift is useful to someone who owns a security and is considering selling it or to a trader who has the ability to sell short. (See the sidebar above for more information.)