Power of Short Selling Explained in Intraday Trading | Intraday Trading For Beginners

[00:01] go directly to this stock and click on "Sell" instead of "Buy." In the click on "Sell" instead of "Buy." In the 1980s, there was a trader named Manu Manik, known as " Black Cobra." He was famous for crashing the stock market.

[00:14] Now the question arises: people benefit from a rising stock market because their wealth will increase, but why should anyone crash the stock market? What is their benefit? What is short

[00:28] short selling? How This video is very important, so please

[00:41] watch it carefully. First, let's discuss what short selling is. If I try to explain it to you in technical terms, you'll be very confused. So, let me first explain it to you with the example of some property dealers.

[00:53] Property dealers also earn a lot of money by short selling. So, suppose there's a property dealer named P whose A client wants to buy this plot, but he doesn't know the price or owner. The

[01:06] property dealer tells the client that this plot is his and he's selling it for ₹1 lakh. He tells him the price is ₹15 lakh. This client is very interested in buying this plot.

[01:23] dealer agrees to sell the plot to him for ₹1 lakh. He takes some advance money from the client and enters into a contract to sell the plot for ₹1 lakh. This means the property dealer sold the plot for ₹1 lakh.

[01:38] What the property dealer does next is go to the owner and tell him that he wants to buy this plot for ₹1 lakh. He then enters into a

[01:56] property dealer is buying the property for ₹10 lakhs and he has already signed a for ₹10 lakhs and he has already signed a what did the property dealer do here? He first sold the plot for ₹1 lakhs.

[02:10] He did not have the plot. So what does he do now? He buys the plot for ₹10 lakhs and after buying it for ₹10 lakhs, he do now? He buys the plot for ₹10 lakhs and after buying it for ₹10 lakhs, he first sold the plot for ₹1 lakhs and later bought it for ₹10 lakhs and delivered it to him. In this way,

[02:25] later bought it for ₹10 lakhs and delivered it to him. In this way, he earned ₹1 lakhs here. This is also a kind of short selling because here he first sold something at a higher price and then bought it back at a lower price and returned it. In this way, he

[02:38] earned money. Let's take another example of this. Suppose I have a friend who I have a friend who

[03:01] if you want to buy this car, then pay me ₹1 crore. 10 lakhs and I will deliver this car to you tomorrow, so my friend makes the payment to me, a contract is made between us, so now I have ₹100 lakhs, from this I take out ₹1

[03:15] lakh and take the ₹1 crore and go to my first friend and give him that money, this will

[03:32] I sold a car for ₹100 lakhs and later bought it for ₹1 crore, so here we have made a profit of ₹10 lakhs, so this is how short selling works, that is, in short selling, first we sell a thing at a higher price and

[03:46] then buy it at a lower price and make a profit, that is, here we follow the strategy of sell high and buy low, so now I will explain it to you with the example of the stock market, so suppose there is a stock whose price is running at ₹1 and you feel

[04:01] that due to any reason its price today can fall It is possible that you think that some of its quarterly results are going to come today which will be bad and due to this the price will fall or you know that some such news is going to come due to which the

[04:15] price may fall or you have done your technical analysis and you feel that its price may fall from here, so because you know that the price of that stock may fall, now

[04:32] 100 quantity of that stock at the price of ₹1, that is, you sell shares worth how much rupees, you have sold shares worth ₹1 lakh, you did not have those shares but even then you can sell that share because here your

[04:48] broker, that is, whichever company has your demat account, helps you in providing you shares. By the way, if you do not have your own demat account, then from there you can open your absolutely free demat account

[05:02] and my own The Demat account is also in Angel V and I have given you the link of the same, that is, it is not necessary that you already have those shares, even if you do not have any shares, you can still sell a share and here your broker

[05:16] lends you shares, that is, suppose you sold 100 shares of a company at a price of ₹000 at 9:30 in the morning. Now as soon as you sold those shares, after that at 10 o'clock whatever news of that company or whatever quarterly results were to come, they come, due to

[05:32] which its price falls to ₹900. So here you had sold your shares for ₹1 lakh. Now when you go to buy 100 shares again

[05:44] and the price has become 900, then how much will you have to pay? You will have to pay ₹900. how much will you have to pay? You will have to pay ₹900. So you had sold those 100 shares for ₹1 lakh at 9:30 in the morning and now you want to sell those 100 shares at ₹1 lakh in the morning. If you

[05:59] buy it at 11:00 for 90000, then here you sold it for 1 lakh and bought it for 90000, then how much profit will you make, you will make a profit of ₹1000000, so this is how short selling works, now I will also show you by doing it practically,

[06:13] first I am just explaining the concept to you, so we have seen the benefit that how we will get profit in short selling, so let us also understand how there can be loss instead of profit, so let us take the same example, you were thinking that the

[06:28] share price of this company will fall due to any news and what did you do, you due to any news and what did you do, you lakh, but what happens is that just the opposite of what you thought happens, you

[06:44] thought that some negative news will come, but instead of that a positive news comes, due to which the share price of that company increases You had ₹1,000,000

[06:58] sold them for ₹000. So, no matter what happens, price. Suppose the

[07:11] price of this share rises before the market closes and you go to buy ₹1,000,000 shares, you'll have to pay ₹1,000,000. If you

[07:25] sold those 100 shares for ₹1 lakh and later had to buy them back for ₹0,000, buy them back for ₹0,000, what would happen here? You'd incur a what would happen here? You'd incur a loss of ₹0,000. This is how we experience

[07:40] profit and loss in short selling. When you think the market might fall today, you can make a profit from short selling. However, if things do n't go as planned, you could incur a loss. Now that you understand

[07:54] how short selling works, let's take a look at it live. Yes, I have logged into my Demat account. If you also given in the description and I am also using Angel. So

[08:08] for example, let's assume that I want to short the stock of A Bank. This is just an example. So, take it as an example. The first way would be to search for the name of that stock by typing 'Axe Bank' here. You can short that stock from here also.

[08:21] Or if you add it as a favorite here, then it will appear in your watch list. You can short from here also. So, what you have to do to short is that I will show you in advance that this stock is

[08:33] my Demat account is only used by me for examples. So, there is no stock here. So you can see that I do not have the stock of A Bank, but still I will sell this stock. So what I have to do is go directly to this

[08:46] click on sell instead of buy. As soon as I click on sell, we are asked how many shares we want to sell. So for example, I want to sell 30 shares. Now if I were to sell 30 shares, you can see

[09:00] that the price of one share is ₹1.63, so according to 30, I should have paid approximately ₹1. But here you can see that I have only ₹7800 in my demat account, but still I am able to sell these 30 shares for only ₹6980. The

[09:16] reason behind this is that we are doing this short selling in intraday and in intraday you get five times margin, that is, this share of ₹1.60, if I select only one share here, you can

[09:31] see that it will cost me ₹32. I can sell it because I want to sell 30 shares, so I have written 30 here. Now whether you want to sell at the limit price you can select from here. So I want to sell at the market price.

[09:44] Market price means the sale will be done at the current price, whereas if I do it at the limit price, then the You have to click on it and after that, as soon as you click on confirm,

[09:59] you can see that 30 shares have been sold in your account here. Here you can see that -30 shares is written here. This means that I did not have these 30 shares, yet I sold them, hence it is in minus.

[10:13] Now, suppose I want to exit it, then coming in green color, this means that when I exit, If I do this, I will buy at this point. I sold this stock for ₹1,6260, and the price has now

[10:29] risen slightly to 90 paise. So, the price has actually increased, but I am incurring a I would have made a profit. also place a stop loss here. To place a stop loss, I have to click on this. Then,

[10:43] option. We have to click on it. Now, as soon as we click on it, see when you will incur a loss. You will incur a loss when the price increases. Therefore, your stop loss should also be large. Here, I am setting my

[10:58] stop loss to ₹1,70. This means that if the price rises to ₹1,700, then my trade will exit. Here, you can see that I have a stop loss order, which is a buy order because I sold first and then

[11:12] I will have to buy later. Let me show you my position again. Now see what has happened here, I sold this stock for ₹1,6260 paise and ₹1,6260 paise and now its price has decreased to ₹1,6175

[11:27] paise and as the price decreases, I am seeing profit here. Now here I will explain to you again with an example when I will make more profit. For this, I will pause the screen once because as soon as I open the drawing tool,

[11:39] our screen will pause, so you will not see any movement here, demat account, the price is increasing and decreasing, so you can see for how much rupees we have sold this stock. We sold 30 quantity of it for ₹1,62,

[11:55] so now if we assume its price has decreased to ₹1,000,000, then

[12:24] and When I buy again, at what price will I buy it? I will buy it for ₹ 3000, that is, first we sold this stock for ₹ 4860, after that I bought it for ₹ 33000, so

[12:36] how much profit will we make here, you can see that here we will have a profit of ₹ 1.60, so in this way we will make a profit in this short selling, so now you have understood the example, so here as soon as I remove my drawing tool,

[12:51] you will see my actual profit, so I have removed it, you can see that right now we are running a little loss here, a little I have invested very little capital here, I just wanted to show you an example, that is why

[13:04] this profit or loss is going on here and anyway we had shorted just a random stock here, when we have to do short selling, then it is important for that that we should know that the price of that share is going to fall, so here we have a The

[13:17] stock has to be selected very carefully by looking at which stock's price can fall. Whereas if I had to show you an example, I shorted any random stock here. So now what I have to do is I have to exit this trade.

[13:29] So first of all I have to cancel my stop loss. So here I have cancelled my stop loss and now after this I have to exit my trade. So here I have to click on it and after that I will

[13:41] show you one thing. Here you can see that you can see these - 30 shares. Now when I exit this, this minus will be removed from here. So for this I clicked on exit and exited at the market price itself.

[13:54] As soon as I exited, you can see that the minus has been removed from here and we can see these 30 shares in which we have made a profit of ₹1. However, this is not the actual profit because in this We also had to pay brokerage, but this was just an

[14:06] example. So, this is how short selling is done practically. Now, I told you about short selling, so it is my responsibility to my responsibility to

[14:19] first, I will tell you a few advantages, after which you must understand the risks associated with it, otherwise it can be very risky for you. So, if I talk about advantages, then see, the biggest advantage is that even if the market is crashing,

[14:33] you can earn profit by using this method. The second advantage is you get margin. You can sell more shares for less money and this can also earn a big profit. But now, if we talk about risk,

[14:49] short selling is much riskier than going long. Let me explain the reason behind this to you with an example. Suppose you go long, that is, first you buy the stock, and then when When the price increases, you sell it and

[15:02] make a profit, whether you do it intraday or in delivery, so what will happen here is that suppose you have bought a share for ₹1000000, then the price of this share will fall to the maximum, if it falls then you can

[15:17] lose only ₹1, but if we talk about increase, then its price here can increase to any extent, suppose it becomes ₹1, then your money in this case will become 10 times, okay, whereas instead of this, if suppose you

[15:35] short a stock for ₹1, then what happens on shorting, you make a profit when the price falls, so now how much can the price of this stock fall, the maximum can be 0, so what will be your maximum profit here, ₹1000000,

[15:49] but if we talk about price increase, then the price can increase to any extent, suppose it price can increase to any extent, suppose it increases to 000, then what will be your maximum loss in this case It could be unlimited, meaning the

[16:02] more the price rises, the more you could lose. So, this is a huge risk associated with short selling. Now, suppose what you did was, you what you did was, you sold 1000 shares in the morning at a price of ₹1, meaning

[16:15] you short sold ₹1 lakh in total. You had ₹1 lakh in your account, but what happens is that now this price increases to ₹10. So, here you should have

[16:27] how many rupees in your demat account, ₹1,200,000. But if that is not in your demat account, then by evening you will have to buy these 1000 shares again. But you do not have that much money, then how will your broker

[16:42] buy those shares? And if you do not buy yourself, then your broker will also not be able to buy because you do not have that much funds. In this case, you could become a defaulter, in which you may have to pay a huge penalty.

[16:56] Third, the short The risk associated with selling is that if you short sell a stock that has very low liquidity, then you sold 100 shares in the morning for ₹000 because of the liquidity at that time.

[17:11] But what happens after that is that the stock gets an upper circuit. In some stocks, the upper circuit is only at ₹5, so the price rises at ₹5 and the stock gets an upper circuit. Now you have money, you had already sold 1000 shares,

[17:25] but now because no one is selling that stock, an upper circuit has been hit in that stock, so now you will not be able to buy that stock, due to which you will face a lot of problems. So always remember that short selling is more risky than going long.

[17:40] You should only do short selling when the market is either crashing, then you will be able to make a profit from cash. Secondly, you are very confident that the price of this stock may fall today or is falling, only then you should do short selling. Thirdly, always keep in

[17:54] mind that only those big companies have an upper circuit. Do short selling. If you do short selling in a small stock or a small company, buy that share again before the market closes and here you may have to pay a higher

[18:09] penalty. So I hope it is clear to you then please like the video and subscribe to the channel. The And if you want to learn about intraday trading in detail, we have

[18:24] created a complete free course which people sell for thousands of rupees. So you sell for thousands of rupees. So you can watch this video. Thank you.