/biz/ - Business & Finance

[Anonymous No.8701791]

Can someone explain shorting to a brain let?

Have a brapper in exchange.

[Anonymous No.8701809]

>>8701791
you expect the price to go down. long is opposie

[Anonymous No.8701822]

>>8701791
>borrow shares (loaned) promising to give them back
>immediately sell
>buy back cheaper
>return to loaner
>pocket difference

if it goes up, you buy back higher and incur losses

[Anonymous No.8701854]

>>8701791
>borrow
>sell@marketprice
>pay premiums per day borrowed
>buy back lower
>pay back borrowed amount
>keep the rest

or

>it goes up to the point your collateral can't buy amount borrowed
>liquidated

[Anonymous No.8701889]

>>8701854
>pay premiums per day borrowed
That only applies to leveraged shorts right?

[Anonymous No.8701901]

>>8701822
>>8701854

This makes a lot of sense. I’m seeing a lot of short ‘x’ coin around though. How does one find the loans in the first place?

[Anonymous No.8702050]

>>8701791
Normally when you buy a stock, you buy it and sell it after it goes up in price. But what shorting does is it allows you to make money if you expect the price to go down. Lets say I think Ford Motor Company is going to go down. What I can do is borrow a Ford stock, and then sell it immediately. For example, lets say I borrowed and sold it while it was at $100. Two weeks pass and Ford has a scandal where they were caught lying about the fuel efficiency in their Ford focus; this causes the stock price to go down to $80. Now what I can do is use $80 to buy a Ford stock, and give that stock back to the person I borrowed from. This means I earned $20. In another scenario, lets say it turned out that the Ford focus was actually more fuel efficient than expected. If the stock goes up to $140 then that means I need to spend $140 to buy a stock to repay the owner. Mind you I only got $100 from borrowing and selling the stock, so I'm down 40 bucks. Something you might notice is that rewards are limited, but risk is infinite.

[Anonymous No.8702769]

>>8701901
buy a futures contract on bitmex

[Anonymous No.8702961]

Now explain it to me, if someone is so sure that the price is going up or down, why not just sell top, buy bottom? Why borrow, and risk someone elses money xd

[Anonymous No.8703847]

>>8702961
you don't always own a stock
this lets you make money from a stock you don't already own
and you aren't risking someone else's money, you've promised to pay them back

[Anonymous No.8703888]

>>8702961
because shorting without leverage requires you to:
>buy
>wait for it to go up
>sell
>wait for it to go down
>buy
>wait for it to go up
>and then sell again

Shorting with leverage allows you to buy without having to wait for the price to go up again and still take advantage of the downswings (albeit more risky).

[Anonymous No.8704043]

>>8702961
>coin moves 1%
>5x leverage gives you 5% loss or 5% gain
basically higher risk/liquidity

[Anonymous No.8704185]

>>8703847
>>8704043
>>8703888

Thanks anons, ill look into it. Need more research. Did i hear right that binance is implementing it in the future?

[Anonymous No.8704211]

>>8701889
no it always applies

you are basically taking a loan and there is an interest fee associated

[Anonymous No.8704257]

>>8701791
Brup
Snuff

[Anonymous No.8704279]

>>8702050
Good explanation