SGDividends would like to inform short sellers that if you are too successful in shorting the stock and the stock price does go down way down...you may not be able to buy it back!...yes its weird..and it happens at some brokerage houses. (maybe all....but definitely some)
Apparently, when you short a stock and the value of the stock plummets like mad ...the brokerage house risk minimization system will prevent you from buying anymore. This is because when you short a stock the system deems you as "owning" the shorted stock and since the stock has devalued in price....you are deemed to have made a lost. And if this lost is more than a certain percentage of your credit buying power...you cannot buy anymore. And if you can't buy...AND IF you are a naked short seller.....sayonara to you..minimum charge of SGD$1000 imposed by SGX.
You can circumvent this by asking your house to increase your buying power ( way before you start naked shorting by the way)......or adding cash as this decreases your "loss"....or paying up for your previous unsettled contra losses or unsettled shares as these will add on to your "loss". Contra profit will minimise this lost.
Basically, if the system see that your loss is more than a certain percentage of your credit buying power.....you are not able to buy anymore. This applies to those who buy a stock first ( not short) also. If the stock you own goes down, and your total loss exceeds a certain % of your buy limit, you can't buy anymore.
Its only in recession times that we become aware of such mechanism as stocks value falls. So well well short sellers...beware...have fun but dont depress the stock too much lah...got auntie uncle life saving inside leh...give chance k.....
Oh yes....the above is the rough story...better to call your brokerage house to clarify and take note that the above is refering to online trading platforms where you place orders online.....
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There is an approve list of counters tat can be short under CFD,, before short must refer to teh list list.
http://www.phillipcfd.com/download/PhillipCFDCounterList.pdf
can still SHORT with CFD now meh?? i dun hv CFD..thot heard my fren said his broker firm ban them from CFD short leh...true ???
Hi SmilyMK,
If you naked short but buy back same day...absolutely no penalty.
SmilyMK ( Date: 17-Oct-2008 10:16) Posted:
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I have lost quite a sum in normal share trading. Not with CFDs, I am profiting to cover back the lost.
CFD is ideal for shorting...
For normal shorting, you need to arrange with your broker to borrow scripts for selling. ie, you may short only when you can deliver... if not, it's naked!... 
SmilyMK ( Date: 17-Oct-2008 10:16) Posted:
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CFDs is good for the current volatile markets. Settlement is Trade + 30 Calendar Days.
I dont understand why so many people liek to naked short..is the risk-reward ratio worth it...and maybe you will damage your health.
For me only CFD , and coupled with my strategy and rules.. I can sleep verysound. and make consistent profit.
Oh no!! Hand itchy . . . shorted 2 days ago. 3 lots only but buy back same day. Will I still get the 1000 penalty??
Can someone explain Naked Short?
iPunter, what's the normal short you're referring to, other than CFD?
Why go for dubious naked shorts?
Isn't it better to do normal short-selling, or do it with CFD, if one gauges the market is going to fall.?
Naked shorting has never been advisable as one is unable to let profits run... it's silly to do it...
thanks for satisfying the curiousity part...so it really is very not worth it to naked short at all now...naked short 1 lot at 0.01 also $1,000 ...
sgdividends ( Date: 17-Oct-2008 01:30) Posted:
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Hi cyjjerry85,
Yes..even if you buy 1 lot of a 0.01 share...you will still be charged minimum $1000 if you naked.
If you want to short...go borrow stocks..
OR if you did not borrow..and you failed to cover back on same day...there is one more way....
That is..go to SGX with your father or mother and transfer the counter they own to your name...but they must have the counter loh..
For your info. U may get more details on SGX web site.
Effective 30 September 2008, SGX will impose a penalty of S$1,000 or 5% of the value of the failed trade, whichever is higher. This penalty is in addition to the processing fee of S$30 per contract processing imposed on all failed trades. The penalty will take effect on trades executed from 25 September 2008 onwards
i m just curious...not very clear of this new naked shorting rule....let's say if u were to short only a small amount like say...3 lots...then u only stand to gain very minimal amount..or e.g. even lose...then still need to pay the $1,000 fine?
is it right to say no matter what amount u naked short...u still need to pay the $1,000 fine?
thanks in advance...been very much curious
haha, naked shortist pop up le
Oh really ! what brokage house ????