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How do shorting stocks help the market?

 
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Lennie Reagan



Joined: 30 Sep 2009
Posts: 12

PostPosted: Sat Oct 24, 2009 2:45 pm    Post subject: How do shorting stocks help the market? Reply with quote

I know a lot about the stock market but I can't figure this question out. How do shorting stocks help the market? I mean doesn't it just reduce confidence and more shorts out there the more you'll know the stock is gonna go down so people either sell and/or short. Any explanation would be really appreciated.
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Xanthia Alysha



Joined: 26 Oct 2009
Posts: 137

PostPosted: Thu Dec 17, 2009 8:06 pm    Post subject: Reply with quote

Shorting simply helps to make a market more liquid. You see there are times that people want to buy shares in a company but the people that currently hold shares in that company are not aware of the buyer or don't want to sell there shares at that current time. Since every sale requires a buyer and a seller the demand from the buyer is met by the supply of the seller who at that point is borrowing shares to sell (going short). Now when someone wants to sell their shares the seller that borrowed shares can get those shares back hopefully at a cheaper price than what he sold them short at.
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Jeminyrider



Joined: 04 Dec 2009
Posts: 7

PostPosted: Mon Jan 11, 2010 7:36 pm    Post subject: Reply with quote

Trading of penny stock requires a basic understanding of how stock market investing works. You may lose your money since 90% of penny stock companies are scams. These companies just want to sell shares and are not interested in developing their businesses.
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