Investopedia

Continue to Site »

Net Short

Filed Under » , , ,
Dictionary Says

Definition of 'Net Short'

A condition in which an investor has more short positions than long positions in a given asset, market, portfolio or trading strategy. Investors who are net short will benefit when the price of the underlying asset decreases.
Investopedia Says

Investopedia explains 'Net Short'

Sometimes advanced traders will attribute a larger proportion of their portfolio to short positions rather than to long positions. This type of portfolio will increase as the prices of the underlying securities decrease because investors are borrowing securities from brokers and selling them on the market in hopes of buying them back later at a lower price. This type of position is taken by many large hedge funds and should only be attempted by experienced traders.

Whenever you see a chart showing "net short positions" on a particular currency (or on any other asset underlying a futures contract), it is implied that the chart depicts net short positions taken by the so-called non-commercial traders only (i.e., speculators). In general, any clearing house, such as the CME Group, should theoretically have a zero net position at any point in time. This means that the number of traders taking short positions equals the number of traders taking long positions, because the clearing house is just an intermediary. That's why the concept of "net short positions" varying over time may sound confusing.

Being net short is the opposite of being net long.

Articles Of Interest

  1.

    Taking A Look Behind Hedge Funds

    Hedge funds can draw returns well above the market average even in a weak economy. Learn about the risks.

  2. Surviving Bear Country

    Stay calm, play dead and keep your eyes open for attractive valuations.

  3. Short Selling Tutorial

    Want to profit on declining stocks? This trading strategy does just that.

  4. Quants: The Rocket Scientists Of Wall Street

    Blend math, finance and computer skills to command a high - and well deserved - salary.

  5. Financial Career Options For Professionals

    Find out if spreading your wings to try a new career will make you soar or fall flat.

  6. The NYSE And Nasdaq: How They Work

    Learn some of the important differences in the way these exchanges operate and the securities that trade on them.

  7. 7 Unconventional Ways Businesses Can Borrow Money

    Find out how your business can get the money it needs - even when the bank says "no".

  8. A Look At CFA Job Opportunities

    Being a CFA charterholder can take your career in many different directions. Find out what your option are.

  9. Investing In REITs Instead Of Property

    Learn why this one particular REIT is a better investment than holding physical property in your retirement portfolio.

  10. Multi-Asset Funds Or Your Own Mix?

    The underlying concept of mixed funds is very appealing. Discover if you're better off with professional management or creating a mixed fund of your own.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Validation Period

    The amount of time necessary for the premium on an insurance policy to cover the commissions, the cost of investigation, medical exams and other expenses associated with the issuance of the policy.

  2. Winner's Curse

    Because of incomplete information, emotions or any other number of factors regarding the item being auctioned, bidders can have a difficult time determining the item's intrinsic value. As a result, the largest overestimation of an item's value ends up winning the auction.

  3. Glocalization

    A combination of the words "globalization" and "localization" used to describe a product or service that is developed and distributed globally, but is also fashioned to accommodate the user or consumer in a local market.

  4. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  5. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  6. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.
Trading Center