1) The selling of a security that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller. Short sellers assume that they will be able to buy the stock at a lower amount than the price at which they sold short.

2) Selling short is the opposite of going long. That is, short sellers make money if the stock goes down in price.

3) This is an advanced trading strategy with many unique risks and pitfalls. Novice investors are advised to avoid short sales.


1) When you think of buying a stock, you must have some clarity as to why you are buying it, what advantages does the stock carry over others etc. Before you decide to buy a stock, do you own study on the stock as an investment opportunity, whether it is a growth or value stock, how is the company performing as compared to its peer group in the same industry and performance against the whole industry.

2) If the company is performing at par with others in the same industry, try to find out about its management and whether they have some credentials to their benefit which are added advantage over the rest. If these criteria are met according to your expectation, it can prove to be a good investment pick.


1) Diversify: One of the smartest ways to minimize the risk involved in Equity investment is to diversify your investment portfolio. Ever since you start your investment, you can invest in stocks from different industry and business operation cycles instead of concentrating on one single category / industry.

2) Hedging: You can also hedge your portfolio holdings against potential adversities by investing in Futures and Options (FNO) of the stocks in holding. This way, you abolish the negative impact of adversities on your portfolio.

3) Keep on updated: At times being up to date with latest information about companies can come to your benefit as you can enter or exit into a stock position according to the potential impact of the news on your holdings or the earning potential of the stock.

4) Whenever you take a decision of investing in to a stock, try to scrutinize the life cycle of the stock’s performance and judge it against your entry timing into buying the stock. If you have invested in stock that as achieved its life time highs and has started to show the sign of coming down from the peak, you should probably exit from the position in such stock as it may keep coming down to unfavorable levels for your portfolio. Hence, it is very important that you analyze the time of entry and exit into any stock investment.

5) It is a wide stretch falsehood that equity investment is a short term investment plan. Though it can be true when markets are at all time high levels, it is still held good that equity investment is not a short term investment plan, it requires time and the patience to stay invested and one cannot reap true benefits of equity investment in short term.

Author's Bio: 

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