Keep in mind that unlike purchasing a stock where the most amount of money you can lose is the amount of money you spend buying the stock (assuming you didn't buy it on margin), if you directly short a stock, there's technically no limit to the amount of money you could lose. If a stock goes up 1000% after you short it, then you could lose far more money than you put into it.

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dyauspitr 3 hours ago | parent [-]

You can always hedge your shorts and limit your downside. It’s not a huge issue unless you have absolutely no idea what you are doing.

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vl 2 hours ago | parent | next [-]

Does market closing and not trading continuously affects this?

If market opens at significantly different price, you may be forced to liquidate and loose more than expected.

	▲	dyauspitr 42 minutes ago \| parent [-]
		Hopefully you have a limit order in place. You can also do more complicated hedges with options which might cost a little bit more depending on the spread but you can guarantee your hedges.

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anonymars 2 hours ago | parent | prev | next [-]

It seems like a prudent warning in a thread explaining the very basics of short selling

Also worth mentioning you might be on the hook to buy it back at any time; after all, the person you borrowed it from may themselves wish to sell it. If widespread, this is the basis of "short squeezes" (e.g. of GameStop fame/infamy), if a lot of short sellers are trying to buy it back at the same time

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inigyou 2 hours ago | parent | prev [-]

Spoken like someone who's never actually done it. Hedging to limit max loss is extremely expensive.

	▲	dyauspitr 2 hours ago \| parent [-]
		I have done it before. How is it expensive, most brokers offer commission free trades now. It’s just another long order.