Why is Short Selling Stocks Dangerous?⚠️

✅ Please like, subscribe & comment if you enjoyed - it helps a lot!

Shorting stocks can be dangerous; in fact shorting anything can be dangerous but let's focus on individual stocks for now. This would apply if you were shorting a stock with a traditional broker or via a CFD or spreadbet.

1) Unlimited Losses - with shorting your losses can be unlimited as a stock could continue going up for an extended time. You always have to look at the worst case scenario like buyouts or bids.
2) Stock recalled - when you're short selling you're borrowing stock from someone who owns the stock (perhaps a long term holder like a fund management company) and then selling it into the market. But the institution fund can recall the stock at any time.
3) Borrowing costs / dividend payment - you have to pay an annual fee for borrowing stock. Also, dividends have to be paid out from your pocket.
4) Squeeze on crowded trades - this is the biggest one.

Of course short selling stocks can be a very lucrative trading strategy but there are some hidden risks (referenced above) you need to be aware about.

Related Videos (do a search on this channel for more videos about shorting/short selling)
Related Videos on Short Selling and Going Short
Make Money When Stocks Go Down: Beginner's Guide to Short Selling Stocks! 🚩
Why is Short Selling Stocks Dangerous?⚠️
How To Find The Best Entry Points For Short Selling Stocks 👇
Rules and Strategies For Profitable Short Selling: Quantifying Risk When Selling New Lows 🚩
Market Too OverSold to Press the Short Side? How to Avoid Shorting into the Hole! ⛳
Long/Short Equity Hedge Fund Strategy - 130/30 Strategy Explained Part 2 🙋

Related Videos (Lucian Miers and Simon Cawkwell)
Is shorting unethical or immoral?
Is there anything morally dubious about short selling?
The Argument: Short Selling ruins Markets and Lives
What is the difference between short selling and naked short selling?
Shorting Shares at a Support Level / after a Major Downward Spike

If you're into short selling those interviews will likely be interesting for you:
Interview with Lucian Miers, known as East London's most feared short seller
Interview with Simon Cawkwell (aka as Evil Knievil)

[ukspreadbetting]

👉 We are seeking more contributors who can produce great video educational content about trading for our channel. If you think you have what it takes please get in touch by sending a message to (remove the AT and substitute by @).
👉 It seems a lot of our viewers are non-subscribers. Make sure to subscribe to our youtube channel as we upload regular videos! If you hit the “Bell” icon (🔔) you will receive a notification on youtube every time that we upload a video on our channel. Bell icon hitters are super fans of our channel 🥰

[jpcobbs]

this video is SO relevant now... wow great video

[fastwood]

Just a few ways to mitigate the risk would be, Don't hold over night, ,ALWAYS put in a hard stop,
Only short highly liquid stocks or etf's . And thank you for your great video's . l

[fernendo]

I learned the hard way as well when I lost 5K in one day. I still short stocks but only when I have a very good setup and I also keep track to get out at a certain price.

[douglasfurlong]

if you place a limit stop...is there a chance that it wont sell your short position and then your on the line for unlimited losses? would there be anything you could do to make sure the limit stop triggers?

[relax]

I keep reading about ppl shorting. I'm too scared to.

[diogogoncalves]

What if I hold small amounts of shares, in a P&D when It's oversold? I mean, they are supposed to die out plus, it's in a overbought area, on the monthly, weekly, daily charts. What do you think?

[jzilla]

I want to invest in this video, because it's about to appreciate in view counts

[whis]

Shorting stocks is creating bad karma. A lot of people will be cursing the short sellers. So most of these short sellers mostly end up worst off. When you short the stocks only you benefit from it, the investors, long traders and company will be cursing you. So how do you expect to earn when you sell "nothing".