Info 1: Short position definition
Info 2: Short position works
Info 3: short and long position
Info 4: example for short position
Quick pick:
Market order that used to trade on down market by selling the stock to other person and profits later at purchased price is what known as short position.
Opening information:
Short position breaks into two words short and position. Short is down, position is some level. Short position means down level.
This article occupied the information about the what is short position, how the short position involved and Functioned all over the public market, and what is the difference between short position and long position, finally one brief example about the short position.
Info 1: Short position definition
Mr.Nothing is entrepreneur who provide his own electrician service to his city people’s, he been doing this business for almost 6 years.
However he use his 70 percent of income to trade the stock and increase his over all net worth in long term, but he rarely use the market order that helps to sold the stock to the other person and bought back from the same person at later date for purchased price.
But he mostly interested in long term by purchasing the stock and holding for long term to reduce the risk of the investment.
Here the market order that used rarely by Mr.Nothing for selling the stock down and profit on the same purchase date is what know as short position.
Because any of the market order that used on any kind of public Securities for the reason for profit at lower down market indeed of upper long term market they are called as short position.
This position of market order would be applied to any types of public Securities such as stock, bonds, commodities, forex Currencies extra…. So lets dive into know how this short position involved and impact the trading in the public market.
Info 2: Short position works
Short position doesn’t represent any of the specific things or object, instead it type of trade that’s takes
Place on selling the Shares to someone for paying back at future date at Purchased price.
Ordinary position for all trade is long position called as buy but the trade take with different amount of agreement in the enforced on the position makes such trade as short position.
Clearly the main purpose of the short position is to purchase and sold the shares to some one, which that one would be broker or any other person but such broker must need to pay back the lend shares at the purchased price in later date.
This helps this position holders to not lose the money even when the stock price would drop to zero dollars, the short position holders would got his or her money at the purchase price of short position.
However reason for calling this position as short trade or position because this short trade would had had any lower value to drop more than zero.
But in long position buy, their is no limit on growing the stock price, it might had infinity chance to grow at any number of price as long as it’s move up.
In more clear way the short position had a end and the long position of buying simply one security won’t had any kind of end.
Moreover the concept of short position trade in stock would be applies in all the types and kind of Securities that are offered in the public market.
Because short position is order trade with opposite to long position but at the same time, short position had cause the serious lose when the market price any securities would rapidly move up again and again.
Most of the people’s confuse the short position and long position deeply so let’s jump into know the key difference in it anyway.
Info 3: short and long position
Short position refer to contract that’s occurred to protect the shares value in future by lent to someone in exchange of money.
In reality that market only had ordinary long position because long position won’t had any contract, but short position would.
The key difference among the short and long position are down and up position. To make more clear this two positions deeply let’s seen into one brief example below.
Info 4: example for short position
Say you and your sister is forex trader who involved in trading the currencies but are the traders who bought the equities shares and profits based on which industry paid more dividends.
Here none of the matter demonstrate the matter that involves in the short position. Because this example only focused on the equities shares of long term only in long position despite of short position.