May. 6 at 6:39 PM
$HIRU know at least one of my followers doesn't quite understand what is happening in the stock market right now and that's enough to motivate me to explain because this is somewhat of a turning point in world history. First, you need to understand what a short is in trading. A short is when you borrow a stock from a broker and sell it immediately at its current price. Then you hope the stock's price falls such that you can buy the stock back at a lower price and return the shares you borrowed to your broker, but keeping the difference.
Example: Let's say I want to short XYZ which has a current price of
$10. I borrow 1 share and sell it immediately at
$10. 1 have
$10 now but i owe my broker the 1 share I borrowed.
Then let's say the price of XYZ drops to
$7. I now decide to
'cover (buy it back) my short position and buy 1 share at
$7
and return the 1 borrowed share to my broker. I made
$10 when I sold and only had to pay
$7 to buy it back lower, so my profit is the
$3 difference.
