The main goal of Rockwell Trading Services on BBB’s website is to describe the generic context of “shorting” and, above all, to convince people of the absolute need to master this technique and apply it whenever the need arises. To dispel any doubt individuals may have, be aware that it is just as easy to trade “short” as to trade “up.” There is no excuse for letting others enjoy your success more than you do.
Commonly Used Terms
But first, people should understand some commonly used terms.
When a person goes “long,” it means that they start by buying shares with the hope of being able to resell it later at a higher price and, thus, clear a profit (the difference between the purchase price and the selling price). When individuals initiate a “short” trade, they simply start by selling the share and buying it later at a lower price (this is just like the previous example except you’re selling to make a profit later by buying cheaper).
Anyone who is active in the markets and refuses to practice shorting (or does not know how to do it) is like someone who just bought a brand-new Porsche that only turns left. The lucky owner of this beautiful toy would decide, out of fear or simply a lack of knowledge, never to take turns to the right. Imagine how that would play out.
The driver will, of course, be able to drive the car a little but people can easily imagine the very limited number of places they could go to. So, for most people, a person who says or wants to “actively or seriously trade” should be knowledgeable in all aspects of trading.
Things to Understand
“Shorting” is simply the act of speculating that the share will go lower than what it is now. On these days, 98% of the stock market participants will passively observe what happens, either by lamenting their “long” (upward) positions that decrease in value or by playing it safe. Two or three percent, on the other hand, are active in such situations and they are mostly objective when it comes to market management.