How to Short Sell a Stock When Trading Falling Markets

Shorting a stock includes selling a borrowed stock within the anticipation of shopping for an equivalent stock back at a lower future price and pocketing the difference. a short sale may be a normal part of a lively trader’s plan because it presents traders with the power to profit from an advancing market and a declining one. this text makes use of examples to elucidate what short sale is, why it's important and lists the highest things to think about when short sale stocks.

WHAT IS short sale AND WHY DO IT?

Short selling is that the process of borrowing shares via a broker, selling those shares at the present market value , and later buying the shares back at a lower cost so as to return the shares to the broker.

Why short stocks? the solution to the present question is multi-layered but generally, shorting stocks presents a chance to trade a decline during a share’s price.
To some, a short sale seems rather unethical because you're essentially taking a stance that a company’s share price will fall, which could end in large scale retrenchments affecting many households within the process. To others, this represents a chance to take a position on over-valued stocks or to profit from the largescale selling of unscrupulous companies.

Nowadays, additionally to retail traders, there are well-established hedge funds that specialize in short sale , or ‘shorting’ various companies. Some short sellers publish research on companies that are imagined to have reported misleading figures within the publication of monetary statements or where there's sufficient evidence of corrupt business practices.
Before diving into the planet of short sale , we recommend you review the stock exchange basics.

WHAT DOES SHORTING A STOCK INVOLVE?

At this stage, it's going to be helpful to differentiate between short sale stocks within the underlying market (non-leveraged) and shorting (selling or taking a brief position) via a broker offering leverage.
The traditional approach has been begun above, where the short seller borrows shares from a broker, sells the shares, and later buys the shares back at a reduction to return to the broker.
However, the emergence of leverage trading has simplified this process to the purpose where shorting a stock is just a matter of clicking the ‘sell’ button for the specified stock on a web platform.

HOW TO SHORT SELL A STOCK

The following steps are often followed when shorting a stock:
Select the specified market
Confirm a down-trending market
Predetermine stop losses and limits (risk-to-reward ratio)
Enter the short trade
The trade is complete once the stop or limit is hit
Traders can make use of the 200-day moving average or use trend lines to gauge whether the stock is during a trending environment.
The short-selling process is often made clearer by using actual figures within the sort of a practical example.

SHORT SELLING EXAMPLE

Let’s say a short-seller wishes to sell 10 shares of Apple Inc as he believes the share price goes to drop by the near future. If the worth of Apple is $200 and therefore the margin requirement is 50%, meaning the trader would effectively be controlling $2000 ($200 x 10 shares) worth of Apple shares while only putting up $1000 ($2000 x 0.5) as margin.

The short seller sets the target at a price of $170 and a stop at $210 to determine a 1:3 risk-to-reward ratio. If price hits the target, the short seller could gain near $300 ($30 x 10 shares), minus any financing fees and commissions.
Nominal trade value = $2000
Margin = 50% ($1000)
Gain after taking profit = $300 ($30 x 10 shares)
Potential loss: $100 ($10 x 10 shares)

This example also presents the perfect scenario but financial markets are often unpredictable and don't move as reliably as presented here. it's for this reason that traders should adopt sound risk management practices from the outset.

WHAT ARE THE RISKS WHEN short sale STOCKS?

When learning the way to short sell stocks it's crucial to stay subsequent in mind:

Potential for unlimited losses -Short positions without stops, theoretically have the potential for unlimited losses. there's no limit to the worth of a share can rise to which further underscores the importance of stops.
Short squeeze –A short squeeze occurs when short traders witness an increase in price (contrary to what was expected) resulting in losses that eventually force traders to shop for (to close the trade) at a better price and take a loss. Price gains more upward momentum as more short sellers buy to shut their positions.

Shariah Stock Recommendation

Gold Price Forecast

Gold price forecast 2021

Earlier this month, Samuel Burman, an analyst at Capital Economics, wrote during a note that if “there are going to be a rapid recovery in economic activity thanks to the vaccine, there'll probably be some further selling of gold-backed ETFs”. However, Burman remains positive about the metal over the longer term: “While the positive developments find an efficient vaccine against Covid-19 have boosted investor risk appetite, we still think that gold prices will remain high within the year ahead.

“All told, we expect that persistently low US real yields will support gold demand and offset much of the weakness related to a rise in risk appetite. As a result, we expect that the gold price will stabilize around $1,900 per ounce until end-2021.”

In their gold price forecast published recently, analysts at Goldman Sachs maintained their bullish outlook for the upcoming year, setting their price target for the metal at $2,300 per ounce: “In our view, the structural market for gold isn't over and can resume next year as inflation expectations move higher, the US dollar weakens and emerging-market retail demand continues to recover.

“Near term, however, it's going to be difficult for gold to get a meaningful momentum in either a better or lower direction.”

Citi bank is additionally optimistic about the commodity’s future. In their latest gold price prediction, the bank’s analysts said they see the metal rising to $2,200 per ounce in three months and to $2,400 per ounce in six to 12 months. “We lift the 2021  base case gold price forecast by $300 per ounce, versus our early July update, to a record $2,275 per ounce,” they added.

In their note on the gold price in 2021, analysts at Australian bank ANZ predicted the metal to rise to $2,200 per ounce by the top of 2020 then hike further to $2,300 by early 2021. However, this valuation will likely mark a peak within the commodity’s.

Bursa Malaysia to trade cautious mode next week

KUALA LUMPUR, Jan 30 — Bursa Malaysia is predicted to still trade a alert mode next week, driven by mixed sentiments by and global economic outlook.

Bhd economist Adam Mohamed Rahim said the local market was expected to ascertain thin trading holiday-shortened week, which can see the FTSE Bursa Malaysia KLCI (FBM KLCI) trading within a decent range.

The current resistance level is spotted at 1,600 points while the immediate price stands at 1,560 points, he said.

“Additionally, the general sentiment would be somewhat dampened following fresh geopolitical tensions after China warned Taiwan that an effort to hunt independence from China could mean war,” he told Bernama.

On the opposite hand, he said the increase in today’s Covid-19 cases to record high could still attract interest in rubber glove counters which structure 10-13 per cent in terms of FBM KLCI’s market capitalization .

“But, any surprise move to increase the movement control order (MCO) further could see some knee-jerk reaction within the market,” he added.

Meanwhile, Adam said restrictions over retail trading of stocks like GameStop and talks surrounding the further development of the US fiscal stimulus within the Senate also affected the mood in Asia.

“As such, glove counters were in high demand on Friday, pushing share prices sharply higher because of the calls made by some unknown investors over social media to require on the short sellers,” he added.

Despite the hefty gains within the major rubber glove counters, he said other stocks were mostly within the red amid fears that retail investors might want to enter other stocks which are a part of the composite index.

In forex market, he said that the ringgit was 0.1 per cent higher against the US dollar amid Moody’s reiteration of a stable rating outlook for Malaysia.

“Aside from that, the US dollar is facing pressure amid nervousness that crept into the greenback following trading restrictions on GameStop shares.

“Looking ahead, the ringgit could appreciate further against the greenback to succeed in 4.03 per US dollar next week if there are positive developments regarding the vaccine roll-out,” he said.

On a Friday-to-Friday basis, the benchmark FBM KLCI slipped 30.34 points to 1,566.44 from last week’s 1,596.74.

On the scoreboard, the FBM Emas Index decreased 199.81 points to 11,363.81, the FBMT 100 Index slid 189.83 points to 11,104.93, the FBM 70 declined 154.34 points to 14,747.34, the FBM Emas Shariah Index eased 861.09 points to 12,187.86 and therefore the FBM ACE Index rose 274.93 points to 11,032.94.

Sector-wise, the Financial Services Index was down 421.54 points to 14,464.06 and therefore the Industrial Products and Services Index inched down 8.16 points to 169.19, while the Plantation Index dropped 125.27 points to 7,097.89.

The Energy Index decreased 40.93 points to 793.14, the Healthcare Index was 48.06 points higher at 3,597.85 and therefore the Technology Index increased 1.32 points to 81.96.

For the holiday-shortened week, weekly turnover decreased to 25.57 billion units worth RM21.23 billion from 33.18 billion units worth RM22.61 billion within the previous week.

Main Market volume eased to fifteen .34 billion shares valued at RM17.64 billion from 18.94 billion shares valued at RM17.51 billion previously.

Warrants turnover rose to 2.04 billion units worth RM320.29 million from 1.98 billion units worth RM315.38 million within the previous week.

bursa malaysia stock tips

Silver, Gold Forcast for Next Week: BULLISH

• Last summer Gold prices went into an aggressive bullish breakout, eventually setting a fresh all-time-high in early-August.
• Since then, however, Gold bulls have been on their back feet as prices have spent most of the past six months in varying forms of digestion.
• More recently, Silver prices have been getting the attention from metals bulls, along with the Reddit crowd which has helped to prod the bid throughout this week.

When investors look to hedge against governments or monetary policy or even just the prospect of fiat debasement, they’ve long looked to the most precious of precious metals to hold as a store of value. I’m of course talking about Gold, and its role in economics spans back for pretty much as long as we’ve followed economics. This helps to explain Gold price action from last summer when prices were flying higher in response to the Fed’s actions devised to offset slowdowns from the coronavirus pandemic. Gold prices began to surge in June and by August, prices had jumped up to a fresh all-time high of $2,075. But that’s when the proverbial music stopped in the breakout; price action began to digest and here we are almost six months later and bulls remain in wait.

Silver prices, however, have received a recent shot-in-the-arm, and with some help from the same Reddit crowd that roiled many equities this week put in a strong topside breakout up to a fresh 2021 high. I wrote about this on Thursday, highlighting the deeper breakout potential that remained in the matter, and that theme continued through Friday trade with Silver prices jumping up to test trendline resistance.

Gold Signals Service

Malaysian Glove Stocks Fall Down

 Malaysian retail investors joined teams on social media and pushed up stocks of under-pressure rubber glove makers on Friday (Jan 29), taking inspiration from the recent GameStop trading phenomenon in the US.

Shares of the US video game shop chain surged from less than US$20 to a peak of US$492 earlier this week, after millions of amateur investors active on online forum Reddit rallied together to punish short-sellers by sending prices soaring.

In short-selling, investors borrow stock, sell it and then purchase it back at a lower price, keeping the difference. But if a stock unexpectedly soars, then investors are forced to buy it back at a loss.

Inspired by the US movement, Malaysian mom-and-pop investors Thursday set up their own Reddit group, naming it BursaBets after the country's stock exchange.

Like the US group WallStreetBets, BursaBets became an online rallying spot for those urging people to buy and hold shares, in this case, targeting glove stocks.

Malaysia is the world's top producer of latex gloves, and major producers saw their shares jump last year on strong demand due to the COVID-19 pandemic.

But the companies were hammered in recent weeks as vaccines became available and they were targeted by short-sellers after the government lifted a ban on the practice.

Malaysia Intraday Stock Picks

Malaysia Stock Picks | SGX Signals - Money life Research

SGX Stock Signals- Live Singapore Stock Market Update 

Malaysian Based Stocks on SGX

More than 40 stocks listed on SGX are either headquartered in Malaysia or have core operations based in the country, and have a combined market capitalization of over S$60 billion. Their businesses are categorized under the consumer, healthcare, real estate, information technology, energy, materials and industrial sectors.

Among these Malaysia-based listings, the 5 best performers in the 2019 year-to-date were:  Silverlake Axis (+33.5%), Aspen Group (+28.0%), JB Foods (+16.1%), ISEC Healthcare (+13.7%), and Frencken Group (+11.9%). These 5 stocks have averaged a total return of +20.6% in the YTD, bringing their one-year and three-year total returns to -8.3% and +101.4% respectively.

SGX rolls out pioneering suite of ESGderivatives

THE Singapore Exchange (SGX) has launched its pioneering suite of environment, social and governance (ESG) derivatives under the SGX First (Future in Reshaping Sustainability Together) sustainability agenda, which was announced in December 2020

Shares of SGX were down by S$0.02 or 0.2 per cent at S$10.07 as at the midday trading break.

Brokers' take: Analysts raise SGX target price; see potential upside of 1.3-15.3%

ANALYSTS have raised their target prices (TPs) for Singapore Exchange (SGX) after adjusting their forecasts higher for the bourse operator's FY2021-22 earnings. This came after SGX posted a net income of S$239.8 million for the half year ended Dec 31, 2020, up 12.4 per cent from S$213.3 million a year ago. during a bourse filing on Friday, SGX said it saw revenue increases across all three of its businesses: equities; fixed income, currencies and commodities; and data, connectivity and indices.