Long and short positions
Many investors in the reality of trying to benefit only from the rise of the shares value. It is believed that if the majority of studies show an underestimation of any of the shares and there are reasons to believe that this is still not all of us know, then we should take a decision on purchase of shares, open the so-called long (long) position. If the decision was correct and the price of the shares will grow, then action can then be sold at a higher price level, which will bring profit to its owner. The purchase of shares in the calculation on their further growth is called opening a long position, or position long. The sale of shares from the portfolio is called the closure of long positions, regardless of whether the profit from it is formed or loss.
If the action is too expensive and its price is likely to decline considerably in the future, the selling on the market is another opportunity earn - work in shorts. A short position (short) or sale without the coating is a situation, when the deal opens the sale of securities that are missing in the portfolio. In this case, the paper provides a broker for a loan, and the investor appears commitment of these securities to return in the future, buying them at the exchange at the close position. To obtain a profit on the position it is necessary to buy the securities at a price lower than the price of opening a short position.
The broker is unable to provide for short selling of all stocks listed on the stock exchange, and compiles a list of such securities. Sell «short» can only be paper, included in the list. As a rule, it is the most liquid securities. The cost of the borrowed securities may not exceed the amount of money on the account of the selling. A short position can be closed in the same day or on any day in the future.
