Chapter 5
Increasing Risk and Potential Return with Short Selling and Leverage
IN THIS CHAPTER
Making money with other people’s money
Garnering tall profits from short sales
Using leverage in every market you can imagine
Borrowing for business and personal needs
Considering the consequences of leverage
In a certain sense, day trading isn’t risky at all. Day traders close out their positions overnight to minimize the possibility of something going wrong while the trader isn’t paying attention. Each trade is based on finding a small price change in the market over a short period of time, so nothing is likely to change dramatically. But here’s the thing: Trading this way leads to small returns. Trading full time is hard to justify if you aren’t making a lot of money when you do it, no matter how low your risk is.
And some days, there aren’t many good trades to make. You may be looking for securities to go up, but they don’t. Zero trades lead to zero risk — and zero return. For this ...
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