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Short Position
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| - | A trading [[Position|position]] taken out in in anticipation of a fall in prices. The term can refer to a an individual trade; for example a trader who has sold coffee futures is said to have a short position in coffee. Or it can refer to a traders' entire [[Book|book]]; a trader may have made a number of purchases and sales in a number of markets but the value of his sales exceeds the value of his purchases, his overall net position is short. A short position can be closed out through the purchase of an equivalent amount of securities. Buying to cover a short position is known as [[Shortcovering|shortcovering]]. | + | A trading [[Position|position]] which increases in value as market prices fall. The term can refer to an individual transaction; for example a trader who has sold coffee futures is said to have a short position in coffee. Or it can refer to a traders' entire [[Book|book]]; a trader may have made a number of purchases and sales in a number of markets but if the value of his sales exceeds the value of his purchases, his net position is [[Short|short]]. A short position can be closed out through the purchase of an equivalent amount of securities. Buying to cover a short position is known as [[Shortcovering|shortcovering]]. |
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| | See also: [[Short-Selling]] | | See also: [[Short-Selling]] |
Revision as of 15:37, 21 September 2009
A trading position which increases in value as market prices fall. The term can refer to an individual transaction; for example a trader who has sold coffee futures is said to have a short position in coffee. Or it can refer to a traders' entire book; a trader may have made a number of purchases and sales in a number of markets but if the value of his sales exceeds the value of his purchases, his net position is short. A short position can be closed out through the purchase of an equivalent amount of securities. Buying to cover a short position is known as shortcovering.
See also: Short-Selling