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shorting - need advice
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tanyagary
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16-Apr-2007 06:08
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Hi all, Thanks for all the replies. It would be hard to believe that all of you on SJ have taught me and other novices so much.You have passed on so much knowledge and ideas. Sometimes it seems the more I learn, I find out how much I don't really know, get what I mean? Sometimes a lifetime isn't enough to learn what we want to. We all have to find a way to trade which is comfortable to us learning from our mistakes. I think sometimes trading on the stockmarket it more than the money maybe it is the exhileration, we feel trying to outsmart the Market. Is it the same for the others? Is it more than the money for some of us ? Most of us need the money, I do, but I find this all so very very interesting. Well , Happy trading. 'Shorting is one part of the market we need to learn- (us novices) and trust me I do would not take unecessary risks till I am ready! |
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choohian
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15-Apr-2007 21:00
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boonhow65, Thanks for the clarification. I admit I do not know the intrcacies of "shorting" but I was trying to answer tanyagary's post with what I know. Hope I did'nt do too much harm, tanyagary. Being an older investor, I have come across many young ppl who lost a lot of their hard-earned money in their quest for quick money so I thought a little advice woul be good. Thanks again, boonhow65. |
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choohian
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15-Apr-2007 20:50
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H i, I am writing from Canada. I am getting a lot of info from you all. I thought that I would just reply to tanyagary but I am learning more instead. It really shows that there are many ppl at SJ who are helpful and unselfish. I am glad that tanyagary has been "adopted". Good for you tanyagary. Wish you all well. |
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boonhow65
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15-Apr-2007 12:27
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Just some clarifications. 1) It is SGX that buys in the stock for you. Not the broker. On settlement day, CDP will hunt for your shares in your account. If you do not have the shares, they will buy in for you at 2 bids higher than the closing bid of T+3. 2) There is a higher commission rate for shorting. SGX charges $50 min for buying shares for you. The rates are definitely not as good as your broker's, which ranges from $20 to $25 min (for internet trading) 3) If you buy and sell on the same day, it is CONTRA. If you sell only, scenario (1) kicks in automatically. However, there are some schemes where you can borrow other people's shares. Do your math before you short. Good luck |
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rickytan
Veteran |
15-Apr-2007 12:05
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agree with geojam, the lst person who comes to my mind is Nicky Ng..... |
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geojam
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15-Apr-2007 10:13
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To me shorting,longing,contra ,margin etc....are just ways to make money. If it suits u ,wear it. Just ask nickyng,he loves shorting. |
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tanyagary
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15-Apr-2007 09:29
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Thanks so much-cyjjerry85, choochian, trymyluck, I did not know you guys would be on SJ in Singapore so early as I am writing from the US. Happy trading in the week ahead and I would not short unless I know what my risks are so I will consider before I jump in! |
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trymyluck
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15-Apr-2007 08:02
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hi, i may be wrong but i think you may not have the concept of shorting correct. shorting means you feel the price of the share will go down instead of up, so you sell first at a higher price and then buy it later at a lower price. so on start of day, u have to sell 4 lots at $5 which is $20000 (even though you dont own the stock) and before end of day you decide to buy it back at $4.75 which is $19000. so your gain is $1000 (minus the commission you pay for both trades which is around $55). the key is u have to do on same day otherwise on T+3 CFD will first find your sell order and since there are no shares listed in CDP, they will automatically force buy your shares at market rate which might be higher or lower. if u want to do shorting , you have to seriously look at CFD where u can decide when to buy back the shares at a hopefully lower price. just my thoughts. |
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choohian
Senior |
15-Apr-2007 06:27
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tanyagary I am not experienced with shorting. I am a careful investor, but I hope to give you some idea about the dangerous game. Also, the best person to ask or confirm is your broker/remisier. If you BUY shares and you have the money, you may play contra as cyjjerry85 mentioned, T+3 that is you have a total of 4 days to SELL or if you choose, pay to hold the shares, hoping for them to go higher at any price or at any time you wish. Shorting is very dangerous especially in a bull market. "Naked Short" means SELLING shares you do not own. Unless you subscribe to "contract for the difference" (CFD), you should "tread carefully". Ask your broker. If you SELL short,say, 4 lots at 5.00, you will have BUY BACK the 4 lots THE SAME DAY even if the share price has gone up. If you do not buy back the same day, the broker will BUY BACK for you (without your permission) the 4 lots at the new day's price and at 2 bits higher( not so sure about the bits). There is no mercy. The broking company really punishes shortists. However, there have been shortists who did well. To play shares, please remember that people with the three - MONEY, TIME and PATIENCE will stay strong. So, my dear tanyagary, "do tread carefully" and GOOD LUCK!!!!!!!!!! |
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cyjjerry85
Elite |
15-Apr-2007 03:37
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I hope you had read The New Paper a month+ ago recently only...this guy used up his dad savings and is he a severe debt playing contra. It can be addictive and it works on the principle of playing the stocks without actually owning it for 4 days. Just a friendly word of advice and prepare you mentally too. =) T+3 contra means...e.g. today you buy...you have a total of 4 days to sell it. *Normally, when I play contra, upon the detection of the latest news I got hold before the majority of local market has it, I will buy that particular stock. Once it get wind to the other stock investors, they will buy and jerk up the price. That is just one principle I work on which could be shared with you. *It works on rumours too, example HPL shares went up based on the rumour of clinching the F1 deal. However, it fell when it's been made known that it is not involved. *Another would be through various technical analysis (TA), you may wish to learn online or from the many books available. Do tread carefully Tanyagary, all the best to you! |
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tanyagary
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15-Apr-2007 03:09
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To the more experienced! I know that short trading is not for novices, but have been trading and am comfortable with my trades but would like to make one foray into the world of short trading to see how it goes. I have cash to cover if it goes the other way so I just need to have this experience. Suppose I buy stock X from my broker for eg: 4 lots at 5.00 and the stock drops to 4.75 the same day so at what price would I have to buy back and pay my broker if I short and in the Singapore Market would I have to cover the same day? Anymore advice would be really welcome as I am here to learn, I have learnt so much from all SJ forumers I really look forward to reading your discussions they have taught me so much. By the way I still have a long way to go but getting somewhere! |
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