Business Management

There are two types of trades involving cash or shares that are not owned short sales and purchase limits.

To more clearly see the short sales.

In short selling (short selling), a person selling shares they do not have their own, hoping the price will fall. They must eventually buy back the shares. Exit short positions by buying back shares is called “covering a short. ” Simply, someone borrowed other people’s shares to be sold at market price. Then the person is hoping that the stock price down so can be bought back at lower prices to be returned to its owner (in stock) and pocketing the profits (the difference between selling price and buying price).

See also: leverage (finance)

In the purchase limit, a person borrows money to buy stocks and hope that these shares can go up the price. Many industrialized countries have rules that require that lending based on collateral from other stocks, this borrowing should be within a certain percentage of the price of other stocks. Other rules include the prohibition of “freeriding” (penungangan free), ie, put a message to buy shares without paying first, and then sell it and use the profits to pay the purchase price in advance.

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