betting the wrong way on the stock market?

Robert P: betting the wrong way on the stock market?
I have heard of people losing money “betting the wrong way on the stock market” what does this mean exactly? ie if a stock goes up people can lose money? thx for the help!

Answers and Views:

Answer by killirien
Using something called “options” people can bet on the stock market going up or down. It’s very risky even if you think you know what you’re doing.

Answer by Coyote O
Yes. You can lose money by a stock going up if you “sell short.” See my source.

Answer by Satish
People loss money if they go against the market trends. If market is bullish they have to go for long. If its bearish go for Short selling. If you dont follow the trends you will lose the money.

Answer by [email protected]
Its basically as the other posters said…when you “go short”, typically, you borrow shares from your broker to sell into the market at the prevailing price in teh hope of buying them back later for a lower price.

So you sell 100 share of ABC corp for $ 1 each ($ 100 in total) in essence, you pocket the $ 100. The price falls to $ 50 and you buy back the shares to repay them to your broker who lent them to you. The “covering” of your “position” costs only $ 50, so you have made $ 50.

But if the shares rise to $ 2, you must buy back tthe 100 shares to repay your broker at $ 2 X 100 shares or $ 200. This means that in addition to the $ 100 you got when you first sold the shares, you have to put up another $ 100 of your own money to close the position.

So you lose..even when shares go up..becuase you bet that they would go down and you were wrong.

Answer by what?
it means people who are long the market lose when the market drops; or people who are short the market lose when the market rises.