short trading, page-6

Hiru,

As a new trader I thoguth you should know that not everyone short sells and whilst it looks good on paper, be aware you have extreme exposure if you get it wrong. For example if you short a share at 34 dollars the maximum you can make is 34, ie it goes to 1cent, but if it goes to 75 dollars or 100 dollars then you have enormous losses.....some poeple like me make it their business to find over sold and shorted shares and invest heavily causing a spike and a rush of short sellers to cover.....

That being said shorting does work soemtimes but as a new trader be careful.....

If you are doing alot of reading find something on futures, this is another way of taking a bet that a share will go down but your max loss is known when you make the trade unlike when you simply short sell a share on the equity market....

For your info comsec offer two types of shorting, one is daily short sell where you sell a share you dont own but you have to buy it back that day, another short sell they offer is when you short sell a share and you have 11months to close it out or buy it back. (comsec organise the shares that have to be borrowed etc etc and charge you a high commission).....both facilities require you to lodge security (margin)

Good luck