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[sharechat] Short Selling Conditions

From: "Karyn W" <>
Date: Thu, 25 Mar 2004 04:19:02 +0000

Short selling doesnt have much effect on a market as there are VERY strict 
conditions placed on such sales by the stock market.  It is not something 
that everyone can do, even if they wanted to, unlike buying shares.
eg. only a limited number of companies can be short sold, only a small 
percentage of their shares may be short sold in any one day, sales must 
usually be settled within 3 days, requirements for margin cover, etc  ... 
for more detailed information see the ASX conditions at

Automatic stop losses are a more potent tool to put a market into a 
spiralling decline, and indeed has been given as the reason for the big "one 
day" market crashes that have occured - ie.  as the price falls, 
pre-determined stop losses are triggered, the stock is sold automatically 
without human intervention, the increased volume of sellers pushes the price 
down, triggering more stop losses, and so on.

Now that people can set auto stop losses via online brokers, it will be 
interesting if we see the same type of volatility in the Aust markets as has 
been seen in the US.


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