Is selling short/buying to cover actually legal with most brokers? I ask because it seems unethical. ?

Question

Is selling short/buying to cover actually legal with most brokers? I ask because it seems unethical. ?

Answer 1

A market cannot continue to move in one direction indefinitely. If it did, you would not have a market.  Everyone would be on one side of the trade.  Due to supply and demand variances, there are always two sides to a trade.  It is no more unethical for someone to buy something anticipating it will go up, then for someone to buy something anticipating it will go down.  Both are putting the same amount of money at stake, and only one can be right. That, my friend, is what makes a market.  With no differing opinions on the future value of a stock, you have no market.

Answer 2

Its not illegal or unethical. It's borrow money from your broker at interest. Nothing more nothing less. If you lose money on margin you will simply lose are larger overall %.

Answer 3

it's the beauty of the system

ps never sell short

Answer 4

When some one sells short, they are borrowing the stock to sell.  They are borrowing it, since at some point they will have to return it, that is buying to cover.