Good evening you investment gruru's.
I would like to learn about shorting stocks, and what I need to do it. I am currently with RBC Direct Investing, although I don't have a margin account (I believe that would be step 1). It is my understanding the process works like this:
- I sell a stock I don't own at price "A"
- I wait, and buy the stock for the 3rd party I bought it from, at current market price "B"
- I get a gain or a loss depending on the difference of A-B (B>A = a gain)
- During this process, RBC Direct investing charges me intreset on the money they paid me to sell the stock at price A
A family friend who trades commodities for a oil company in-town, mentioned that in his line of business, if the stock price was higher then I sold it at, I would have to make payments on the margin until the term was due, and vice verse if the stock price was lower.
It is my understanding I would need my own cash to back this up, about 150% of the "margin" according to the link below. Would anyone mind telling me if what I just said was correct, and mention if I am missing anything and a few more question I have.
Also, would you all stick with Direct Investing, I don't have the $100,000 to make there sweet rates.
https://www6.royalbank.com/education...ption-faq.html
and the rates you need for cash to back your margin account are here
http://www.rbcdirectinvesting.com/RB...t-account.html
Greatly appreciated,
Kavy