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Taking short positions allows you to make profits from a falling market.

You can short sell most assets, including Shares, Indices, Forex, Commodities and Cryptocurrencies.

Short selling

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What is short selling?

Short selling is a strategy that can be used in either investing or trading. Essentially short selling allows you to speculate on assets that you believe will fall in value, allowing you to potentially benefit from falling markets rather than just relying on traditional (long) buy only strategies.

How does short selling work?

Short selling allows you to speculate on markets that are falling. This would normally involve you borrowing the asset then selling the asset and buying it back at a cheaper price. Returning the asset and keeping the difference as your profit.

 

With derivatives such as CFDs and Spread bets, you can speculate on the price movements of assets without ever owning them or needing to go through the process of borrowing the assets. You simply choose the assets and amount you want to short sell and execute the trade.

 

You can short sell most assets, including Shares, Indices, Forex, Commodities and Cryptocurrencies.

 

Short selling is also used to reduce/hedge risk in an existing position by taking a short position in the same or similar asset.

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Short selling example

Here is an example of short selling a stock.

 

Let’s say that AstraZeneca shares are trading at £82 and you think the price will fall.

 

You open a short position of 1,000 AstraZeneca shares, two days later the AstraZeneca shares have dropped down to £80.

 

You decide to close your position, your profit would be 1,000 shares x £2 = £2,000 profit before commission. However, if the price of AstraZeneca shares had risen by £2 you would have lost £2,000 before commission.

Why short sell ?

For profit

 

Short selling allows you to take advantage of a whole new set of opportunities. You can profit from the many assets that come under selling pressure at some point due to geopolitical uncertainty, economic news, supply and demand shocks and company mismanagement.

 

To hedge risk

 

Short selling allows you to hedge your risk, in a given asset, for a certain amount time. You are long and short of the same assets and therefore eradicating risk, but only whilst the hedge is active.

Additional short selling  risk

You should also note, with short selling, unlike a traditional long (buy) position which can only go to zero, a short position has unlimited downside: for example, a stock could go up from £1 to £11 (or more).

 

If you had a short position at £1 you could lose 10 times your investment ie 10 x £1 rather than the £1 you would have lost if you went long (buy) and it went to £0.

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Dedicated relationship manager

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Huge range of markets

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Premium services

​Trusted and regulated

 

Why short sell with Guardian?

Huge range of markets

Including shares, indices, forex, commodities and cryptocurrencies.

Stop losses

Set a stop loss to close your position automatically if the market moves against you. Stop losses are free but your position may be closed out at a lower price than your order if the market gaps.

Risk management

Risk management tools available to avoid large losses.

Guaranteed stop loss

Like a standard stop loss but guarantees that your order will be closed at the level requested by you. There is no cost to set up a guaranteed stop loss, but you will pay a small premium if it is triggered.

Dedicated relationship manager

All trading clients have unlimited access to their own dedicated relationship manager.

All of our relationship managers are qualified in derivatives including Spread betting and CFDs and hold the prestigious MCSI status.

Negative balance protection

Negative balance protection ensures that you will never have a negative balance as our platform provider IG will always bring your balance back to zero at no cost to you. (1)

Award-winning

Choose Guardian Stockbrokers to be your partner in trading

Dedicated relationship manager

Easy-to-use platforms

Huge range of markets

Multi Award Winning

Premium services

​Trusted and regulated

 

  1. Negative balance protection applies to trade related debt only and is not available to professional traders.

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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit.

 

All trading involves risk.

The value of shares, ETFs and ETCs bought through a share dealing account, a stocks and shares ISA or a SIPP can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results.

The information on this site is not directed at residents of the United States, Belgium or any particular country outside the UK and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

Guardian Stockbrokers Limited is authorised and regulated by the Financial Conduct Authority (No. 492519).

Registered office: 14 City Road, London EC1Y 2AA. Registered in England and Wales. Company No. 06756375.