short selling, page-13

  1. 4,636 Posts.
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    The significant distinction of going long vs short (from a risk perspective) is the maximum you can loose.

    Going long, your stock can only go backwards to $0 and you loose (up to) 100% of your capital. Going short, your loses are unlimited. Sell short at $5 and suddenly the stock rockets to $25 you need to pay 500% of the difference!

    True, its unlikely to happen but it is a risk to consider. Some CFD providers provide a guaranteed exit trade, others explicitly don't guarantee they can execute an instruction in a volatile market. A scary thought.
 
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