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Short term trading

How you can make money on short term trading and why it is better for inexperienced investors to forget about this method.

An investor can earn on the difference in quotes in two ways. The first is a long position. In this case, the investor plays long and buys shares in order to then sell them at a higher price. A short term trading means that when trading securities, the investor earns on the fall of the stock. In this article, I will tell you how traders make millions on such transactions.

How to make money on depreciating stocks

A short position is of interest to the investor, since, as a rule, shares become cheaper faster than they rise in price, and with the right choice, the profit of a bear can be really serious.

To open a short position, an investor borrows shares from a broker against the security of money in the hope that the securities of this particular company are overvalued and their value will fall in the near future.

The investor then buys the shares at the current price and then waits for them to fall in price. It is assumed that when and if the share price does fall, then the investor buys the same amount of securities that he borrowed, but at a reduced price.

Before choosing a company whose shares can be shorted, a competent investor thoroughly studies its history, financial statements and finds the key risks that threaten the company.

The investor receives profit from the difference between the purchase price and the sale price. That is, you could borrow shares from a broker and sell them for $10. The stock then went down to $5, at which point you sold it. So your profit was $5. True, from this profit you will pay a small commission to the broker. In addition, if you suddenly return the shares when they pay dividends, the broker may require you to pay them too.

It is worth noting that selling shares from your own portfolio cannot be a short position. When you sell shares that you bought earlier rather than borrowed, you are closing out a long position.

Shorting pros

An experienced investor who correctly predicts the behavior of the securities of a particular company can earn very serious money on shorting. A textbook example of successful shorting is George Soros’s game against the pound sterling in 1992. Soros managed to earn $ 1 billion on the “black environment”.

What are the risks of short term trading

The problem is that a short position cannot be opened for a long period. This means that after the expiration of a predetermined period, you will still need to return the borrowed shares to the broker – regardless of whether the securities have fallen in price or not. Therefore, if the shares that you bought at $5 rose in price to $10, then in this case your loss, not profit, will be $5.

This is one of the main risks of a short position. When you buy stocks in the hope that they will rise in price, then your losses are limited – if you spent $100, and the securities fell to zero, then you will not lose more than $100.

In the case of a short, your loss can be anything, because the stock can rise in price from $100 to $1000, and you will have to buy them at this price in order to repay the broker.

An example is the recent situation with investors from Reddit. They specifically bought large quantities of shares of companies that, according to investment funds, should have become cheaper. Due to the actions of the participants in the popular forum, the value of the shares of companies such as the AMC cinema chain and the game retailer GameStop, on the contrary, began to rise.

GameStop

According to some estimates, shorts have lost about $5 billion due to the rise in GameStop stock alone.

Tesla

Another example of an unsuccessful short is the story of the relationship between investor Jim Cheinos and electric car manufacturer Tesla. Cheinos has been betting Tesla shares for five years. According to the investor, the first four years everything was not bad. Then in 2020 the shares of the company headed by Elon Musk have risen in price by 700%. “It was very painful,” admitted a well-known short who made $500 million shorting Enron stock in the early 2000s.

In addition, going short is not only risky for the investor, but also for the broker who lent you the stock. Therefore, the broker may set certain conditions for the borrower. For example, a broker determines how much money a client’s brokerage account must have in order to open a short position. Moreover, the broker can forcibly close a short position if the stock suddenly starts to rise. The share price at which the position can be closed forcibly is also negotiated in advance.

Another nuance is that not all stocks are open for a short position. The short trader’s choice is limited to the most liquid securities.

What is short term trading squeeze

Such a situation, as in the case of GameStop, can lead to a short squeeze.

A short squeeze occurs when the stock of a particular company suddenly rises in price, and several short sellers are forced to close the position at once in order to minimize losses.

This can push the price even higher, which will attract the interest of ordinary investors to the securities, who are also starting to buy. In this case, the remaining short sellers are forced to buy shares even at a completely unfavorable price. Thus, the price can rise for a long time, and short sellers will find themselves in a very significant minus.

How to protect yourself when use short term trading

It is better for a novice investor not to try to make money on a short position, as this is simply too risky an option.

To avoid big losses, experienced investors use stop-losses – exchange orders that allow you to automatically sell shares when they reach a certain price.

Also, the same rule applies to a short position as to investing in general – don’t invest more than you can afford to lose.

FAQ

What is short term trading, or short?

A short position, or “short”, means that when trading securities, the investor earns on the fall of the shares that he borrowed from the broker.

How much can you earn on shorts?

An experienced investor who correctly predicts the behavior of the securities of a particular company can earn very serious money on shorting. A textbook example of successful shorting is George Soros’s game against the pound sterling in 1992. Soros managed to earn $ 1 billion on the “black environment”.

What are the risks of a short position in trading?

The problem is that a short term trading cannot be opened for a long period. This means that after the expiration of a predetermined period, you will still need to return the borrowed shares to the broker – regardless of whether the securities have fallen in price or not. Therefore, if the shares that you bought at $5 rose in price to $10, then in this case your loss, not profit, will be $5.


Disclaimer: This article is not investment advice. Assess the risks yourself before making any investment decisions.
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ARIBUKA.COM

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Basic information of this investment project

  1. Platform with an average up to 0.2% – 1.3% earnings daily;
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Project legend

Investment platform is a new generation accessible to everyone. Collaborative work for two years has shown results that have exceeded all expectations. By diversifying our capital into six areas, we have been able to reach the average monthly rate over 20%. At the moment we invest in such instruments as: IPO – the first public sale of shares of a joint stock company. ICO is the initial placement of new cryptocurrency units. Startup – young and promising companies that have recently started their activities. Offline business – buying a pool or share in a large business. PoS Mining is an online mining option without the need to purchase expensive equipment. Pre-ICO – a sale of company tokens before the oficcial ICO is held.

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  • Professionals in their field
    Our team consists of specialists with longstanding experience;
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ARIBUKA.COM Marketing

This platform offers us five investment plans. The amount of income you receive depends on the amount of your investment. I would advise you to invest and do not be afraid of any tariff plan. This platform pays out a profit in the instant mode. Let’s take a closer look at all of them:

ELEMENTARY

This tariff plan is suitable for novice investors who want to get to know our company. The investment period is only 1 month. You can return your deposit at the end of the investment period. Average daily profit is 0.3%. At the “Elementary” tariff, your funds work in one of the most profitable areas – Pre-ICO.

Short information on this plan

  • average daily profit is 0.3%
  • the total profit is 9%
  • investment period is 1 month
  • daily acrual ofprofit
  • you can withdraw the deposit after the end of the deposit term
  • minimum deposit $ 20
  • maximum deposit is $ 100000

SHORT

Your investments are in the fund’s turnover for 90 days on the short tariff plan. The average profit of investors is 0.5% per day. You will be able to withdraw your deposit after the end of the investment period. With the “Short” tariff, your funds work in the Pre-ICO area.

Short information on this plan

  • average daily profit is 0.5%
  • the total profit is 45%
  • investment period is 90 days
  • daily acrual ofprofit
  • you can withdraw the deposit after the end of the deposit term
  • minimum deposit $ 20
  • maximum deposit is 50000

Conservative

On this tariff, based on the past results, we expect an average profit of around 0.7% daily. “Conservative “represents it self investments in prospective areas such as: POS Mining and Offline Business. There is also a yield graph on the investors page. In it you can see the profitability for the month as well as for all the time.

The minimum deposit on this plan is only $ 20. You will receive profit every day, 7 days a week.

For example: if you invest $300, you will receive about $2.1 every day, 365 days a year. After the end of the deposit period, you will receive about 255% profit. Of this profit, 100% will be the return of your deposit. And also you will get 155% profit.

Balanced

On this tariff, based on the past results, we expect an average profit of around 1% daily. On the “Balanced” tariff your funds work in such high-potential areas as: IPO, ICO instruments, as well as invested in perspective startups.

The minimum deposit on this plan is $ 500. You will receive profit every day, 7 days a week.

For example: if you invest $3000, you will receive about $30 every day, 365 days a year. After the end of the deposit period, you will receive about 365% profit. You will get back about 11000$. Of this profit, 100% will be the return of your deposit. And also you will get 265% profit.

Aggressive

The most profitable tariff plan presented by our company. Investing with us you will be able to receive an average up to 1.3% daily. In the “Aggressive” tariff your funds work in 2 directions: Startups as well as IPOs.

The minimum deposit on this plan is $ 2000. You will receive profit every day, 7 days a week.

For example: if you invest $10000, you will receive about $130 every day, 365 days a year. After the end of the deposit period, you will receive about 475% profit. You will get back about 47500$. Of this profit, 100% will be the return of your deposit. And also you will get 375% profit.

Also, on the graph of each tariff plan, we can see how much the investor has already earned. This information can be viewed on this page.

Payment systems

This investment project provides big numbers of payment systems. You have the opportunity to open a deposit through the Bitcoin, Ethereum, Litecoin, Dogecoin, Tether (ERC20), Tether (TRC20), Tron, BNB BEP-20 , Shiba Inu BEP-20.

The following limits on the minimum and maximum amount of the deposit are set for the tariff plans.

Minimum amount: 20 Tether TRC-20 , 150 Tether ERC-20 , 0.002 BitCoin , 0.05 Ethereum , 0,15 LiteCoin, 80 DogeCoin , 230 Tron , 0.036 BNB BEP-20 , 1000000 Shiba Inu.

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How to register in ARIBUKA.COM?

  • You need to follow my link to register on the platform
      • After switching, in the upper right corner of the site you need to find the “Registration” button;
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      How to open a deposit?

      Using the username and password you entered during registration, log into your account. Click the “Invest” button. Firstle you need to choose a tafiff plan and click to invest.

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      How to order a payment?

      Before withdrawing funds, check the correction of your payment wallet. If you have not added a wallet, do it by going to the “Wallets” section of your account.

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      Do not forget that there are minimum payments on the platform.

      The minimum withdrawal amount is: 10 Tether TRC-20 , 150 Tether ERC-20 , 0.002 BitCoin , 0.03 Ethereum , 0.1 LiteCoin, 60 DogeCoin , 60 Tron , 0.02 BNB BEP – 20, 250000 Shiba Inu.

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      Social networks

      This platform develops its social networks. This is a big plus. We can follow the news of the project. There they put out information about the weekly earnings. In my opinion, it is very convenient to follow the development of the project.

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      Questions Answered

      If you have any questions, you can always write to the online support of the platform. The consultant will quickly answer your questions and help with any problems. And you can always write me. Also, you can search for the answer to your question on the FAQ page.

      Conclusion

      The administration of this platform has already given my referrals money many times. This time shouldn’t be an exception. The project is well prepared from a technical point of view and also has a beautiful and user-friendly design. In my opinion, the platform has a great future. I recommend this platform to add to your investment portfolio. I see the potential for great growth and development.