short shares

When you buy something (long), it means you think it'll happen.

When you short something, you're saying you DON'T think it'll happen.

If you want to get rid of shares bought, you sell.
If you want to get rid of shares shorted, you cover.

thanks

So you cover after the shares you shorted go DOWN, is this correct?

correct ,(it is like selling off the buy position)

DestroyerKahn, that is true. However, if you wait until the proposition pays out at $0, then it will automatically cover it for you, the same way that it automatically sells your long stocks when they pay out at $100.

if you short a share and the prediction does not happen then will you get payed $100 or will it only sell it

For the best explaination look in this thread: www.popsci.com/content/shorting-stock

I just tried this... I bought 500 shares of a stock (short) after it had dropped by $2/share I did a cover for all the stock. I expected to make $1000, but instead my net worth DROPPED $1000. I tried your link, but it doesn't explain it too well. Can anyone who has made money of short/cover please explaine exactly what you do?

Raggedjoe, you have not given enough information to diagnose the problem.
1) Is this the only stock you owned during your experiment? If not, your net worth is affected by movements of all your stocks.
2) You shorted the stock "after" it dropped? Did the price drop more after you shorted?
3) You did not factor in commissions (.25/share). You paid $125 to short 500 shares and $125 to cover 500 shares.

To make money on shorting/covering, you need to short it at a high price and cover it at a lower price (at least .50/share lower to account for commissions) then you shorted it for.

I know others can explain it better than me.

If you short something and the Price per share drops, then you're doing good.

For example: I shorted 100LAP. My "Average Paid" was POP$47.50. The "Last Price" showing in my portfolio is POP$45.25. That means that my Net Gain (for this particular stock) is POP$2250.

On the other hand, I shorted DRINKLABELS at an "Average Paid" of POP$56.75. The "Last Price" showing in my portfolio is POP$59.50. That means that my Net Loss (for this particular stock) is POP$2750.

If I cover the stock, then I get back (Last Price)*(Number of Shares) - (Commission at POP$0.25/share).

That is my current understanding of the ways short and cover works here. If I missed something or am a little off, please let me know!