How does Short-Selling of CFDs work on easyMarkets?

Learn what is Short Selling in Forex

Short selling has long been a popular trading strategy among investors who want to profit from a down market or hedge their position. But how does short selling work and why is this trading strategy used? If you are new to short selling, this article will help you understand the following concepts:

• What is short selling?
• How does short selling work?
• What is an example of a CFD sell position?
• Advantages and disadvantages of CFD selling.
• How to Sell CFDs on easyMarkets?
• Frequently Asked Questions About Selling.

There are favorable situations for selling goods. Selling may be advantageous, for example, if the company announces a downward revision to its future earnings outlook, or if the company is trading at an unreasonably high rate. Of course, these are just basic examples, and every trader needs to do his own research to determine when it is appropriate to sell a product.

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Why choose easyMarkets for Short-Selling?

One of the biggest benefits of using easyMarkets is that you can trade with secure and regulated brokers that have been in operation for over 20 years. We are licensed by multiple regulators around the world, including CySEC in Europe and ASIC in Australia. This license adheres to strict standards for protecting you and your assets.

When shorting products on the easyMarkets platform, you have access to our innovative risk management tools. Tools such as dealCancellation, freeze rates, negative balance protection, no slippage, and free guaranteed stop loss can help you mitigate your risk and protect your funds.

In addition, there are no restrictions on the products that can be sold. EasyMarkets web and app, MT4, can sell over 200 products including stocks, indexes, metals, commodities, foreign currencies and more.

No slippage

Trades are executed on the easyMarkets platform at the rates you see so that you are not surprised by changes in spreads during volatility. You shouldn’t be surprised by the spread changes during volatility.

Tight fixed spread

As part of our commitment to price transparency, our spreads do not change during trading hours. You can know the cost in advance.

Free guaranteed stop loss

Protect yourself and open trades from runaway losses. EasyMarkets is a standard feature of web and app platforms.

Negative balance protection

Another condition offered as a standard feature of easyMarkets accounts is that you are protected when you trade.

easyMarkets can sell all kinds of commodities such as Forex, stocks, indexes, commodities, metals, cryptocurrencies and more.

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What is short selling?

Short selling is a strategy in which investors seek to profit from falling asset prices. Generally, traders short-sell stocks, but this strategy can also be applied to other assets such as commodities and cryptocurrencies.

Traders tend to short sell if they are skeptical of the short-term performance of an asset. For example, if a trader thinks Tesla has a higher reputation than other automakers, he will have a short-selling position and will try to take advantage of the potential stock price decline.

Short sales can also be used as a hedge against falling price fluctuations. This means that if a trader thinks his portfolio may lose value and wants to protect himself from potential losses, he can open a position in the opposite direction of the original position.

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What is the short-selling mechanism?

Traders usually short sell to assets such as stocks. When short-selling stock, the trader first borrows the stock from the broker. Consider selling the stock immediately after borrowing and buying it back at a lower price later. Let’s say the borrowed stock has fallen as expected. In that case, the trader will get the difference between the selling price and the buying price after returning the shares to the broker.

Another way to profit from falling asset prices is with derivative products like CFDs. With this trading method, you can trade the price movements of an asset without owning it. In other words, if the price of an asset is expected to fall, the trader only has to open a sell position with the broker. This selling method is often preferred by traders because it is easier than physically acquiring an asset.

You can also use derivative products such as CFDs to profit from falling asset prices. With this trading method, you can trade the price movements of an asset without owning it. In other words, if the price of an asset is expected to fall, the trader only has to open a sell position with the broker. This selling method is often preferred by traders because it is easier than physically acquiring an asset.

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What is an example of a CFD sell position?

For example, suppose Ford’s stock price is overvalued and you think it will fall in the future, assuming you trust the brand Ford . So you decided to short sell the company.

Ford’s stock price is $ 14. You decide to have a short position of 100 shares, bringing the total trading value to $ 1,400. The next day, Ford’s share price fell 5%, falling from $ 14 to $ 13.30.

You correctly predicted this decline, earning $ 0.70 per share for a total return of $ 70.

This time, you think Coca-Cola’s stock price is trading above its intrinsic value and it’s time to cut it. So you had a short position.

The stock price of Coca-Cola is $ 55. You have a short position of 100 shares and the total trading value is $ 5,500. The next day, Coca-Cola shares rose 2% from $ 55 per share to $ 56.10.

As the stock price rose, you suffered a loss of $ 1.10 per share, for a total loss of $ 110.

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How to sell CFD products on easyMarkets?

With easyMarkets, you can start trading with a deposit of at least $ 25.

Create an account and log in

If you don’t have an account yet, create one for easyMarkets. Then log in to your account.

Select the product you want to trade

We have more than 200 trading products such as cryptocurrencies, stocks, indexes, commodities and metals.

Timing to short

After selecting an item, press the “Sell” button to open a sell position.

Stop and limit settings

Use easyMarkets’ proprietary risk management tools such as stop-loss guarantees, deal cancellations, and freeze rates to mitigate the risk of loss.

Monitor trades

After the sell position opens, we carefully monitor the trades and evaluate their performance.

Position close

If the forecast is correct, the price will go down and you can make a profit. If the price goes up instead, you will incur a loss.

It can be very risky if a trader blindly enters a sell position without fully understanding what a sell position is and how it works. However, if traders have a clear trading strategy and use appropriate risk management tools, they can limit their exposure and reduce the potential for loss. easyMarkets offers innovative tools such as dealCancellation, freeze rates, negative balance protection, and guaranteed stop loss.

easyMarkets does not charge any fees or commissions for selling products. The only fees we charge are spreads and swaps for overnight transactions.

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