In order to sell a stock that you don’t own (go short), you must borrow them from your broker, sell them, and then replace the shares by purchasing them at some point in the future hopefully at a lower price. This is where the phrase selling short comes from. You don’t own them. This tactic is more or less like issuing a CFD contract (a contract of difference).
Unlike in Forex the broker who lent the shares that you sold short may ask for the shares back at any time, in which case you will have to buy shares to cover those you borrowed from him. Your broker has the right to make you cover all the shares you borrowed at any time no matter how inconvenient and loss accumulating time.
However with Forex trading and unlike stock going short on a certain currency pair is as profitable and risky as going long.
With such a market traders are able to tap into many lucrative opportunities even when the market is suffering volatility and all charts are in decline. When you go short in Forex that mean you just switched the currencies in the currency pairs so EUR/USD short is actually nothing more than a USD/EUR contract.
We have seen some horrible economic times lately from a great recession, banking failures, real estate bubble bursting to Greece dept crises and the euro zone issues. Hence it is clear that it won’t be over anytime soon and recovery will be a slow process therefore I recommend every stock trader to start learning about Forex trading and get into the markets as soon as possible so they can benefit from the markets going down.
UWC is a European broker regulated by FSA (UK) and CySec (Cyprus) offering access to the Forex and CFDs on stocks markets with 24/5 support and unheard off tight spreads that goes as low as 0 pips. For more information please visit http://www.uwcfx.com
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