DAY 2 Education: two directions of US stocks
Review：
【Investor Education】Learn US stocks by Simple Numbers
DAY1 Education：5 practical knowledge of US stocks
Hey, tigers:
Today is the second day of our column "Learn US stocks by numbers".
In this article, I will introduce two directions of US stocks.
① two direction：the short and long;
② The risk of shorting is high, so the beginner should be very careful;
③ There is interest on short selling;
④ How to short in Tiger Trade.
First, the concept of short and long.
Because the word "short" is often mentioned in the news, let's talk about short first.
The short is to sell stocks that you don't like and make money through the decline of stock prices. How to understand?
As long as you think the stock will fall in the future, you can borrow the stock from the broker and sell it; when the stock really falls, you can buy it at a lower price and return it to the broker.In these two operations, short selling is to earn the difference.Ps:shorting does not require you to hold a particular stock.
It is easy to understand that the long is to buy a stock and wait for its share price to rise to gain profits.
Take $Tesla Motors(TSLA)$ for example：If you buy Tesla at a price of 600 in July 2021 and sell it when the price rises to 1200 in November, you can get twice the profit.
Two, the risk of shorting is high, so the beginners should be very careful
For beginners, investment must be stable. In other words, you should avoid the loss of your capital.
Therefore, you must bear in mind the risk of shorting.
Again, the risk of shorting is much higher than that of going long!
Let me give you an example:Supposing that you bought 100 shares of $DiDi Global Inc.(DIDI)$ at $10.
In this condition, your biggest risk is that Didi falls to 0; so the loss is 100%, which means loss $1000.
But if you short Didi (sell 100 shares) at $10, and didi goes up to $20, then my loss is 100%, a total of $1000; if up to $30, my loss will get 200%, a total of $2000.
Simply put, the risk of shorting is that the more the stock rises, the more you lose.In my opinion, it is just like a bottomless pit.
Three, short also need interest.
As mentioned before, short selling is to borrow stocks, which is equivalent to borrowing money.
Borrowing money inevitably has interest, and you need to pay attention to the interest of short selling: Short interest rates fluctuate.
Short is not a friend of time, because you pay interest every day, so friends who have the idea of short life must have a sense of risk to avoid huge losses.
4. How to short in Tiger Trade APP?
It's time for practice. Take out your mobile phone and experience it with me.
Step 1: Find a company
After opening the Tiger Trade App, find stocks, such as Apple.Step2: choose short
Click the "Trade" button at the bottom of the page and select "Short".
Step 3: Confirm Sell
Choose the direction: sell, and enter the price and the number of shares,and then click sell to place an order.After the operation, your account will have a negative position, as shown in the following figure:
Today's Interaction (Comments Win 20-50 Tiger Coins) :
Do you know when short interest rates are high and when short interest rates are low?
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Thank you @Tiger_Academy for explaining what is short selling in the stock market, the risks involved, and showing very clearly the steps to do short selling using Tiger Trade App.
As the risk of short selling is very high, for new investors like me, it is better for us “Don’t Play Play”
Short interest is used as a sentiment indicator: an increase in short interest often signals that investors have become more bearish, while a decrease in short interest signals they have become more bullish. Stocks with an extreme level of short interest, however, may be viewed by contrarians as a bullish signal.
利率的高低和供应需求息息相关的！
Day 2, about short, Short interest as a percentage of float below 10% indicates strong positive sentiment. Short interest as a percentage of float above 10% is fairly high, indicating the significant pessimistic sentiment. Short interest as a percentage of float above 20% is extremely high.
I am quite confused with the question, is the'interest rate' related to short volume or amount of money need to pay as interest? @Tiger_Academy forgive me so blur 🙏
Thanks @Tiger_Academy for Lesson 2 on the 2 directions of US stocks. This lesson is informative and valuable as it cautions us to be very careful when shorting stocks. It is a timely reminder that it can be "like a bottomless pit" if the shorted stock rises instead of going down.
If short interest rate is high, it is an indicator of a pessimistic market sentiment. Conversely if short interest rate is low, then it indicates a bullish sentiment.
I look forward to your next lesson and learn more valuable tips on investing in the US stocks.
@Tiger_Academy
thanks for this @Tiger_Academy
Lesson 2 by @tiger_academy. Long &Short stocks
Thanks for sharing @tiger_academy 😊🙏