1. DIYTechnicalAnalysis is a private community of traders and investors interested in building wealth from Indian equity market. You can become a member with a one time registration fee of ₹199. Click here to become a member

Shorting basics with actual examples

Discussion in 'Technical Analysis' started by monilhathi, Jun 13, 2012.

Tags:
  1. monilhathi

    monilhathi New Member

    Joined:
    Jun 7, 2012
    Messages:
    92
    Likes Received:
    0
    Occupation:
    Marketing
    Hi Shabbir

    I read your shorting article on your blog. While it is easy to understand conceptually, can you explain to a beginner on

    1. how to actually spot a shorting opportunity?
    2. How do you short a stock from your broker application? I have ICICI Direct a/c. Can you short a stock from this? I know there is an option ‘Margin Sell’. But do you need to have the stock in your demat? I don’t intend to do any margin trade but want to take advantage of shorting as I know one can make good money sometimes
    3. Does one need to buy back the stock later and how much quantity and what price and when?

    I am sorry, but it would really help to explain an actual shorting trade with various permutations (cover, long etc), to a beginner like me. I assume there may be a lot of shorting opportunities I may be missing out due to my ignorance on this method of trading. I have tried various websites to understand how does this work but still cannot simply get it :(
     
    monilhathi, Jun 13, 2012
    Share #1
  2. shabbir

    shabbir Administrator Staff Member

    Joined:
    Apr 30, 2012
    Messages:
    6,699
    Likes Received:
    1,940
    1. I have explained in my ebook about some of the best and sure shot shorting options. Morning panic is a clear sign of shorting opportunity and if you see a morning panic in any of your stock, you can wait for the perfect spike to short the stock.

    2. I prefer trading in cash segment where you can short a stock but you have to cover your short (also known as buy your short) the same day.

    3. Yes you need to buy the same number of stocks you have shorted and if you have initiated a short position in cash market, you have to buy them before 3:30PM or else you will be penalized 20%.

    I would suggest you to avoid shorting strategy to start with and as you gain in confidence in market, you should be fine shorting the stocks as well.
     
    shabbir, Jun 13, 2012
    Share #2