short selling explained the meanings of this share market practice

short selling explained the meanings of this share market practice, something i tried to do in the past was short selling, here is a overview of the practice of short selling of stocks and how it works and what it means, it is quite complicated to understand and years ago took me a lot of trouble just to understand the practice of short selling of stocks though i have never really been a massive fan, as to me short selling seems more of a gamble then a investment.

In short selling stock market traders sell stock that they do not own by borrowing shares from a stock broker that needs to be returned at a later date to this stock broker they borrowed shares from. then if the stock price goes down on the shares, the short sellers buy stock in the market at the lower price, and return the stock to the broker and then make a profit. thus by selling first and then buying later, the short sellers benefit from the stock prices going down instead of up.

If there is a lot of short selling going on though the supply of the shares may actually exceed the demand for the shares, causing the shares stock market price to go down. short sellers then can make more money by then selling enough stock short to artificially increase the volume of selling and drive down the market price.

Where do these short selling stock traders get there stock to borrow?, whether you know it or not, they might have been borrowing shares from stockholders like you. If your shares are registered in your broker's name instead of yours or are held in a margin account, your broker may have lent your shares out to these short sellers. if your shares are registered in your broker's name or being held in a margin account, the brokers are free to lend your shares out to short sellers. while short sellers are borrowing the stock, they are actually working against your interest in seeing a higher stock price, as short sellers are looking to cause lower stock prices so they can buy the stocks back at a profit.

many companies experience short selling in the stock market, though some of the short selling techniques have been banned due to the recent financial meltdown of 2009 with the recession said to have partly caused by dodgy bankers and dodgy dealings, at that time a few years ago when the banks were going bust a lot of scorn was poured onto the practice of short selling of stocks and now it is more closely regulated to try and stop damage to shares and stock markets.

how much were short sellers to blame for the recent financial crisis?.