Forum Archive Index - March 2004

["Karyn W" <karyn_in_oz@hotmail.com>]

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
http://www.asx.com.au/markets/l3/ShortSales_AM3.shtm

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.

Karyn

_________________________________________________________________
Personalise your phone with chart ringtones and polyphonics. Go to  
http://ringtones.com.au/ninemsn/control?page=/ninemsn/main.jsp


----------------------------------------------------------------------------
To remove yourself from this list, please use the form at
http://www.sharechat.co.nz/chat/forum/