Difference between revisions of "Naked short selling"

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Short selling is a term used in the investment world when an trader borrows shares of stock for a short time in order to sell them and make a profit. The way she makes a profit is that she buys shares she believes will soon go down in value, sells them at the current market value, and then waits until the value declines before purchasing them. When the loan term is up, she must pay back the value of the shares. If they have gone down in value, she only needs to pay the current value of the shares, which is lower than what she sold them for. It is a risky venture but if the trader is experienced, she can make a lot of money.
 
 
 
Naked short selling is short selling shares that the trader has not actually borrowed or that have not been shown to exist. Instead of first borrowing the shares, the trader sells them to a buyer in the hopes she might be able to get the shares later, for a lower price, still making a profit. This practice has been illegal since 2009, yet continues to happen because of loopholes and paper-electronic system discrepancies.
 
Naked short selling is short selling shares that the trader has not actually borrowed or that have not been shown to exist. Instead of first borrowing the shares, the trader sells them to a buyer in the hopes she might be able to get the shares later, for a lower price, still making a profit. This practice has been illegal since 2009, yet continues to happen because of loopholes and paper-electronic system discrepancies.

Revision as of 00:46, 7 June 2019

Naked short selling is short selling shares that the trader has not actually borrowed or that have not been shown to exist. Instead of first borrowing the shares, the trader sells them to a buyer in the hopes she might be able to get the shares later, for a lower price, still making a profit. This practice has been illegal since 2009, yet continues to happen because of loopholes and paper-electronic system discrepancies.