What is Short Selling and How to Benefit From It?
of commodity is inflated and does not represent actual value. This is exact opposite to more known buy and hold bullish strategy where investor buy the commodity or security feeling it be undervalued and will increase in price.
Short sellers need to be aware of three important aspects which can affect profitability of their short positions.
1. Interest on Borrowed Security ? As the commodity or security is borrowed from broker or third part account so interest is required to be paid on that. This is generally not applicable if you are settling your account on same day but can erode profits if kept on rollover for long duration. Depend on brokerage firm it percentage can change but generally it?s around overnight interbank lending rate.
2. Dividend Distribution ? If the security which is been shorted by trader gives out
