10 Things You MUST Know Before Shorting a Stock
Michael Shulman, September 9, 2009
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#1 Risk
In a long position, the most you can lose is 150% if you borrowed on margin to leverage your investment. With a short position involving the borrowing of the stock, your theoretical potential loss is unlimited.
If you borrow a stock when it is trading at $10 and the stock runs up to $200, then you're out $190 a share -- 19 times your original investment! Not a good thing.
Learn how to bet on a falling stock without taking on so much risk.
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