Quote:
Originally Posted by Kavy
aka having cash to back up the chance that the stock may rise?
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If you're a naked short, the theoretical possibility of loss is infinite and not limited to the amount of money in the account.
Your ideas may make perfect sense but the market isn't always efficient or as smart as you are.
There are stories from the late 1990's, as an example, of smart people losing everything because they thought the market was overvalued and due for a huge fall . . . . . . ultimately, they were right but were broke and forced off their positions too soon, at huge losses, because of "irrational exuberance" when the market kept climbing.
Have control of your potential downside.
Cowperson