/vt/ - Virtual Youtubers

>>70670506
>I honestly don't know the benefits of selling/buying borrowed stock.
It's not hard, I'll explain it in very easy terms
>back in the days the stock of a company was a piece of paper.
A company would issue (let's say) 100.000 stocks, you would purchase one of these pieces of paper worth 100 stocks meaning you now is the owner of 0.1% of the company.
You would take this paper and sell for whatever value you thought 0.1% of the company was worth and that's it.
Then
>stock traders became a thing and you no longer had to hold the piece of paper in your hands
You would call your trader, he would buy 100 stocks of a company in your name, the trading company would hold the piece of paper on your behalf and you would wire him the money for the purchase.
Then you decide to sell, he would find a buyer, part with the piece of paper and wire you the money.
Then
>trading accounts became a thing
Your trader would give you a certain balance you could keep that he knew you were good for it (let's say, 10000 dollars) and you wouldn't have to wire him the money right away, he would allow you to buy on credit and, as he was holding the piece of paper on your behalf, you couldn't really default on it because, in reality, he could just keep your stocks if you didn't pay.
That's the origin of "margin trading", it is not as much as a "loan" as a "collateralized" one with the stocks serving as the collateral with an inherent value equal to the loan.
Then comes what is called a "margin call": if your stock crashes in value your collateral can no longer cover your balance meaning the trader will demand you to pony up the money and, if you fail, they'll fire sale your stocks in their possession to cover the amount you owe.

It's not esoteric stuff, except this used to be very regulated and now it is no longer with retail traders allowing even 4chan retards to keep a balance on the tens of thousands of dollars, it's pretty much institutionalized government sanctioned gambling