What Does It Mean to Open Short in the Markets?

What is a short? What does short mean in the markets? What does it mean to open a short position in the stock market? We have compiled the answers to the questions that frequently come up in the markets for you.

Shorting futures, especially on cryptocurrency exchanges, is a frequent transaction. The terms short position and shorting are a method used in the investment world. Tera Investment Economist Enver Erkan summarizes the 'short' opening process with the following statements: "It is a position expected by selling a commodity or financial instrument with the expectation that its value will fall at a later date. A short position is taken with the expectation that the price will fall. When the shorted instrument, share or commodity loses value, a profit is made and it is possible to buy the relevant instrument at a lower price afterwards. It is widely used in spot and futures derivatives markets.''

What does short mean?

A short position, or short position, is a transaction in which holders of an investment asset sell that asset in anticipation of a decline in its value. This strategy, called a short position in Forex markets, is defined as selling the asset and waiting for it to fall. For example, if an investor who already owns gold sells it in anticipation of a fall in gold prices, this is called a short position.

How to open a short position in the markets?

Opening a short position in the economic markets is expressed as waiting for the price of the sold asset to fall in order to buy it again. The difference between the high price sold and the low price bought becomes the profit of the short position. Short positions can be held in spot transactions as well as in futures transactions. On cryptocurrency exchanges, it is quite common to see people shorting futures. Shorting futures involves shorting futures contracts with the expectation that the price will fall. Shorting futures is referred to as borrowing money. Therefore, it becomes a very risky strategy. In exchange for a certain amount of collateral, the desired investment asset is contracted to sell. This asset is sold and the price is expected to fall. It is bought again at a low price and sold again at a high price. After this trading, a profit is made. When the time in the contract expires, the position is closed. The borrowed asset is returned, but a profit has been made. Shorting is a transaction with risk. If the asset sold does not meet the bearish expectation, that is, if it rises, losses will be incurred. For this reason, it is more reliable for an experienced investor who knows technical analysis to open such positions. The investment information, comments and recommendations contained herein do not constitute investment advice. Investment advisory services are provided on a personalized basis, taking into account the risk and return preferences of individuals. The content, comments and recommendations contained herein, which are in no way directive in nature, are of a general nature. These recommendations may not be suitable for your financial situation and risk and return preferences. Therefore, making an investment decision based solely on the information contained herein may not produce results in line with your expectations.