‘Short’ Selling on Etoro – Make Money as The Price Falls


Hey everyone, so what’s short-selling?
People want to know what short-selling is.. Basically, what it is, is it’s a way to
make money off an asset – any asset, as the price is going down. Normally when
you’re trading and when I first thought about trading and stuff, I always
used to hear “Buy low, sell high.” You know, that was always the thing. You want to
buy something, and I always expected that as it goes up in price, you know, it
becomes more valuable. So, I buy one thing at $10 you know, and a week later
it’s worth $20, so I can sell it for 20. It’s a very simple kind of
Maths – buy low, sell high. You make money as the asset goes up in value. But you can
also make money as the value of an asset falls in value, and it’s referred to as
‘selling’. Now, there’s a bit of a language problem here – a little bit of a language
problem. So, when you get used to trading – when you start trading, some
of the language that I used out in the normal world, beforehand, you know – I’d say
“Yeah I want to sell Apple,” and I used to think that meant I have some Apple stock,
and I want to get rid of it, and change that for money, and go away and do
something with my money. But, when it comes to trading, there’s two different
terms. So, if you ‘open a sell position’ in Apple, it means you’re opening a trade
which is betting that the value will go down, and as the value of Apple goes down,
you want to make money off it as the value goes down. You’re betting against
the price of Apple stock. That’s when you ‘open a sell position’. So, if I’m going to
‘Sell Apple’ – kind of, it takes a bit of discipline from everyone, because it’s
context based – you’ve got to watch it. People mix up these terms… But, a ‘sell
position’ is generally making profit as it goes down. If someone says “I’m going to
sell my Apple,” because they’ve got the word “my” in there,
they’re probably meaning that they want to close their position in Apple. That’s the
correct kind of technical term, you know. You have a position – you could open a buy
position or you could open a sell position – it means you’ve opened a trade.
You can change the word “position” for “a trade”, all right. So, you
can have a “buy position” or a “Sell position” – that’s your positions open.
Whenever you have either made enough money from any of those positions, and
you want to take the cash, you “close” that position. Or, if you’re losing too much
money, and you don’t want to lose any more, you can also close that position.
All right, so that’s ‘closing a position’, or ‘closing a trade’, all right.
It means you want to get out of it. You’ve got something open, you want to
get out of it, and you want to take your money and run, basically – do something
else with it. A “sell position”… “A sell position.” not “closing a position”, but “a
sell position” or a “sell trade” is different. That’s the one where you want
to make money as the value of something goes down, okay. It’s not that confusing.
I’ll show you why it’s not that confusing. Here I am, in ‘Trade Markets’
alright, really simple – let’s say I go to… Say I go to Gold – and here’s the familiar
button – just, when I want to open any trade on any asset, I go to ‘Trade’, and at
the top, we’ve got “Buy” and we’ve got “Sell” Buy, Sell, Buy… They really couldn’t have
made it much simpler for us, alright. And what this means, if you press ‘Buy’, it
means you want to bet that the value of the asset is going to go up, all right. This
is the current price, all right – this is the price that you can buy it at.
Actually, it’s not really the current price, it’s the current price plus their
little bit of a spread fee. That’s what that price actually is, and you can tell
that it’s not the actual price because look, if I press ‘Buy’, here’s “Sell” – watch this
price as I click “Sell”. You see it changing? All right – so, somewhere in the
middle of those two prices, the “Buy” price and the “Sell” price, there is the actual
price of gold at the moment. If I buy it, they already make me buy it slightly
higher than the actual price – than the market price. That’s their spread fee.
If I “Sell” it, I buy it at a slightly lower price than the actual market price.
That’s their spread fee again, all right. That’s why that number keeps… that changes
when you press these. So, if I want to buy it, it means I bet the value will go up,
and I want to make money as it goes up. it’s at 1319 – if it goes up
to 1320, I’ll have made some money. Awesome. Now, if I want to bet that the
value will go down, all I do is I press
“Sell”, and as I press Sell, I buy it at 1318.60 If the value goes down to 1317, I’ll have made money. The converse is also true though – the other way is also
true. So, when I buy, if the value goes up I make money, and if the value goes down, I lose
money. If I’m selling an asset, if the value goes down I make money, if the
value goes up, I lose money, okay. Now, what does that mean? If you think about it, why
is it more risky potentially when you’re selling something? All right, so if I buy
it, it can go up infinitely from here. It won’t, do you know what
I mean – well, not yet unless everything collapses or whatever, but it
won’t go up, but it could go up to 3,000 yeah. The most it can go down is 1319.02 – then
it’s at zero okay. So, my risk on the downside – that’s how much risk I have,
which is a lot, because usually, you know, I use leverage with gold. But, if I’m selling, okay –
it can go down to 0, in which case that’s the amount of profit I could make,
because remember, I’m hoping the value will go down. Profit. What’s the potential
downside? It’s infinite. So, if it goes up to 3,000, you know, that’s all loss for me. It
won’t, but what I’m trying to highlight is a
point. When you’re buying, you set your ‘Take Profit’ above, and you set your ‘Stop
Loss’ as a lower number. When you’re selling, your ‘Take Profit’ is a lower
number, and your ‘Stop Loss’ is a higher number, okay. I hope that makes sense, because if
it goes up in value, and you’re selling you’re losing money. It’s fairly simple.
I’m sure you understand it. Alright, so how does that work? How in God’s name
does that work, where you can make money selling something… All right, so when you buy,
you buy it – if it goes up in value, someone goes “Oh, I’ll buy it now, I think it’s
going to keep going up in value.” And you go “Alright, you have it now – give me the money – give me the value for it.” yeah – I’ve made my money. Selling is a
little bit sneakier, really, in ho w it actually operates. Alright, so… A way to
imagine it is – let’s imagine that I’ve been looking at Apple stock, alright. I’m
looking at Apple stock, and I’m standing next to my friend John, here. And John’s
also looking at Apple stock, and there’s a big crowd of people over here who are
also looking at Apple, and talking about Apple. Now, John and these other people,
they all think ‘Wow, Apple’s doing really well, man I think that new iPhone’s great –
look at this, what they’re releasing – I think the value is going to go
up, it’s looking rosy for Apple.” But I, sneaky guy, have heard some news. I’ve heard
some news about the latest iPhone… I haven’t really, this isn’t investment
advice, it’s just an example… But, let’s say I’ve heard some news – some
advice, and this advice isn’t so good. This information isn’t so good – I think
the price of Apple is actually going to go down, you know. These guys – this whole
crowd here – John, and these other people … They’re all clamouring – they all want
Apple, and I have some secret information that it’s going to go down somehow, or gut
feeling… So, I go over to the broker, and say “Hey broker, could you just give me
100 shares in Apple? It’s $10 a share,
all right, so give me 100 shares in Apple, and I’ll give them back to you,
okay? And I’ll give you spread fees.” I mean really, that’s what Etoro’s making –
it’s always making the spread fees whether we’re buying, or we’re selling,
they make their spread fees. So, I go to the broker “Hey man, lend me 100 shares in Apple” He goes “Yeah, sure give them back to though!” okay I go “Yeah, of course I’m going to give them back to you!” He gives me 100 shares in
Apple, all right. I then go, and I sell them to John. I go “Hey John..”
Actually, he’s my friend, I feel bad about John, so I go over to one of the people in the
crowd, and I say “Hey guys in the crowd, I’ve got 100 shares of Apple.” And everyone’s going “Oh my God, Apple’s going to go up, Apple’s going to go up!.” So, they buy them off me. So, I’ve just sold 100 shares which I
borrowed off the broker. I sold them to this crowd for $10 each – I’ve got $1,000,
yeah. Now, what happens is that Apple’s price – I was right, my information was
correct – so Apple’s price starts to fall, all right. So, I’m here with my $1000 from those 100 shares I borrowed, and sold to the crowd. The price
is going down – the price is going down of Apple. It goes down to $5, all right
like a couple of weeks later. It’s $5 per share, so I take my $1000, I
owe the broker – remember, I don’t him an amount of money, I owe him 100 shares.
That’s what I borrowed off him. So, I take my $1000 and I go over to the
crowd, who are now like “Ah God, I want to get rid of these – it’s going down!” I go
“I’ll buy them off you.” So I go over, and I buy 100 shares for $5.00, okay.
That’s $500, all right. I go, I spent $500 on those shares… I take the shares – the
100 shares which I’ve bought for $5, and I give them back to the broker. I’ve
paid the broken the spread fee, and okay, he’s happy. Alright, so I now have – I’ve
given him back his 100 shares. I have $500 left. I sold them for $1000,
they went down, when they went down enough, I went and bought them back, and
gave them back to him. It’s left me with $500. That’s how you make money with the
prices going down, in a sort of simple analogy. Okay, so in that same analogy
there, what happens if the price goes against me? So, I’ve just borrowed the
100 shares off the broker, I’ve sold them to these guys for $10 a share…
I’ve got $1000, alright. Now, I have to give the broker back his 100 shares. The
broker is always going to get paid, all right. They’re not like the nice guy, just
doing me a favour. The broker’s going to get his money, all right – every time. So, I owe him 100
shares. So, let’s say the price actually goes up instead of going down.
I’ve sold them at $10 each – I’ve got $1,000 alright. So, I’m waiting two weeks and now
the price hasn’t gone down to 5, it was 100, I was expecting it to go
down – it’s gone up to 15… I’ve still got to give this broker guy
his 100 shares back, so I’ve got to buy them back now. So, I have to go to
that crowd, cap in hand, I have to spend that $1000 I made, and I also
have to fork out another $500 of my own money
because it’s now – they’re 15 each, and I need to buy a 100,
you know. So, I have to actually pay out an extra $500… So, that’s
how you’d lose money in that situation. Either way, I have to give this guy his
100 shares back, and I can’t, you know just make the money out of nowhere, or change
the market or something. Literally, if the price goes the wrong way, I’d have to buy
those shares back, and I have to give those 100 shares back to him.
That’s what happens in that analogy if it goes against me. Either way, he’s getting
paid – the broker’s always getting paid. Now why doesn’t the broker charge me
interest or something – to borrow those shares? On other places, I think they
actually do. On Etoro, it seems to be it’s just the spread fees – they just want their
spread fees. If I open a ‘buy’ trade, I pay them spread fees. If I open a ‘sell’ trade,
and do my sneaky business, then I also owe them spread fees. I always pay spread
fees. Now, do I have to go through this complex process of buying from him,
selling to them, getting it back, taking it… No. I just press ‘Sell’. If the value goes
down, I’m making money. If the value goes up, I’m losing money, you know. If I lose
too much, they’ll stop me out of the trade. It’s that simple, but I just wanted
to explain the mechanics of ‘how can that happen?’ How can it be done? You borrow
from the broker, you sell to someone at that time, you wait till the value goes
down, you buy the assets back, and give them back to the broker. You keep the
difference. So that’s kind of how selling works. There’s a lot of people talking
about how, you know, there might be a ‘correction’ – there might be a this, there
might be a… A ‘correction’ is a way of saying the market goes horribly wrong, by the
way – the price goes down. They never say “I think the price is going to drop.” They
always try and coat it in a more positive way of looking at it… “There’s a
correction.” So, even when it goes down, it’s correct,
somehow, you know. So basically, if there’s a correction, the whole value goes down,
this is a way that people can make money, even if the value of assets is going
down. It is risky though, I mean I listen to people – especially around Cryptos. If you’re going to sort of do … I tried initially, when I first started,
this idea of like I buy low, sell high. Then, when I see it going down, I short
sell it on the way down, then I try and close that trade. Then I try and buy it
as it goes up, then I short… The problem is it’s very hard to time where’s the top,
where’s the bottom, where’s the top… I found it super difficult. So, all I’m doing at the moment is copy trading, and kind of leaving those decisions to
the three people I’m copying. Jay and here Mr Thor, Fastik and Jay. Look,
they’re doing well. I’ll give an update on what I’ve been doing, because I’ve
added some money to them, but at the moment I’m not trying to do that – I’m not
trying to buy and sell. And I hear Jay, you know, he was trying to short Ripple, and he got
so much flak for it, he really did. People were just going nuts. But anyhow, even he says,
you know, how difficult it is to short Cryptos because they move in such a
volatile way. It’s very hard, you know. I found it as well, very very hard to judge
where to buy and sell, so I’m not doing that anymore.
I’m going with the general overall trend, rather than, you know, the
spikes in that trend do you know what I mean? Instead of going buy, sell, buy, sell, buy,
sell, buy, sell, I’m just going to buy… Do you know what I mean – and trying to disregard this. I’m going with the longer-term trend. But, that is how you do short selling on Etoro.
It’s actually fairly simple. You just click the ‘sell’ button, put your
trade, and realise that your ‘stop-loss’, and your ‘take profit’ will be
the other way around, against the value of the stock. There we go.

44 thoughts on “‘Short’ Selling on Etoro – Make Money as The Price Falls”

  1. Great vid man. Thank you for explaining the mechanics behind sell positions. Had been wondering about that for a while. 👍

  2. Hey, Thomas. I really like your videos but it's high time you mention the obvious. On etoro you don't actually buy/sell stocks. You are, actually, trading with CFDs (contracts for difference). It's as much related to betting as it is to trading equities(stocks). Hence the margins (2,5,10, etc). It's important for beginners to understand that and what other implications it has, the most notable of which being that with cfd's you don't actually own the stock that you are trading. You are not a stock-owner of any sort. Make sure to mention that.

  3. Well done. If you notice few of the top traders on Etoro invest in currencies. They baffle me! I do tend to scalp the best traders for a small profit, but it pays.

  4. Is having leverage like spread betting?
    Can you lose more than you put it. If a have £200 in my etoro account and I put £200 at 25 x leverage into stocks could I end up owning lots of money if the value falls. Or am I just risking my £200, I am worried if my shares dropped lots they would say I owe them £1000,s . Please answer

  5. Hi Tom….I just read this and thought you might find some of the info useful……………The ."Jacob"…he,s talking about is the admin. of a facebook group I belong to….(." I Love Crypto"..)…..who seems to be very knowledeable……..>>>>>>>…….Larry Altman
    5 hrs
    The Crypto world is evolving and changing. Its like a 1000 piece puzzle that you have to slowly put together.
    I know from running my own business that you have to surround yourself with people that know more than you.
    I am a person that doesn't have the mindset to read technical charts on Cryptocurrencies. My background is crunching numbers. I have nothing to do with the day to day operations in my business. I am just behind the scenes crunching the numbers and looking for growth opportunity.
    I found Jacob after hundreds of hours of research to find the Coins to be into.I had a very good 2017 and 2018 will explode.
    Its funny i have had a few PM wanting me to do porfolios for people.Basically the number crunching. I just do this to help folks. I want nothing for my input I just put it in because it woks for me.I have made the mistakes I have learned from them and I pass this on.

    A few things that you may need to have.and understand
    1. An excel page for monthly gain and loss What are your goals .Outlay this for the year by month. So you could run like 3 columns . Example Monthly gain of 25% A row for 50% and say 75% Gains. Start each column with say $10000 start for example only. Run down each column with the gain .Jan – Dec
    You have to know what your working towards.
    BE REALISTIC on your goals.

    2. You need to have access on your phone for your trading platforms.. This helps tremendously. If the app for the trading platform is not working well just go through your browser directly

    3.You need to utilize a crypto tracker app. I use Delta for my Trade signals and I use Cryptoport for my LT Coin My Hunter Coin and My 10 Cheap coins. Cryptoport allows multiple wallets. Blockfolio was good but they are on overload and I pulled out as it became very slow.

    4.Be patient with the platforms. They are growing and that is good.If you go to Coinmarket cap you can click on a coin say
    VEN . When you click on it you then scroll down to the charts and you will see a toolbar above it and it says MARKETS
    Click on this and it will tell you every market that coin is traded on.I utilize 6 platforms at this time
    Binance,Bittrex,KuCoin,Poloniex,and Kracken.Coinbase
    I only have Coins on Bittrex, Binance and Kucoin at this time

    5. If you are with Jacobs signals you will see he has probably 15 or 20 coins in active trades. Folks ..Knowing numbers the law of averages will work with you. I am personally not in all of them right now as I only have 10 trading blocks that I utilize. Dont fear not being in every signal YOU WILL BE FINE
    In my opinion I would have at least $250 in each trade block.Also Jacob has stated you are more than welcome to get out of a Trade at any time. I generally get out after it hits 75% of the Sell. I am happy with that and allows my trade blocks to flush a little quicker.

    6. Know your % Outlay and stick to it.
    My breakdown is 40% Long term 6 Coins
    40% Jacobs Trade signals. 20% Hunter BTC that generally rolls in and out of Tether.
    I also put $200 in 10 different coins that are under 25 cents and have a market cap between 50 million and 500 million. This is not in my % Breakdown as this is just what I call FUN RUN . I did this as I see that everyone is running to the cheap coin so they can get more… LOL…SO… if i end the year 2018 with a zero$ balance I am prepared for that … Just a FUN RUN..

    Ok as we all know this Crypto is the Wild Wild West..
    I understand it cant be traded like any other exchange ie Stock Market..
    SO I am making a few changes due to trends I see in the market as I believe whats done in one marketplace ie Stockmarket will not work in Crypto.
    One has already been made I went from 15 Long term coins to 6 Long term coins. The reasoning is that I want to be able to move quickly on these coins. I have set a STOP LOSS on all of these Coins. In my opinion this market has more FUD and drama then any investment I have ever entered into. So I accept that this market needs to be handled differently than traditional investments to include even the Futures market!!
    UNFORTUNATELY I condensed to 6 Coins on the 5th BUT I did not enter STOP LOSSES yet.
    So they are all moving back up nicely but it wont happen again at least not with my portfolio.
    So now when the FUD and drama affects the market it wont affect my porfolio.
    So the NEXT FUD or Drama drop
    I sell coin xxx to BTC and move BTC to USDT
    As soon as the damn FUD and drama ends I get back in and its a lot easier to handle when I am only dealing with 6 coins and one of those is BTC
    This is my take on it and I am under no circumstances a Financial Advisor. All of my Coin Picks for Long Term I spent a good deal of time researching them and Jacob had some I jumped on as they came recommended from many other sources.
    Do your due diligence and Happy Trading. You have to think outside the box Crypto World.
    Happy Trading to ALL and hope this helps

  6. Hi Thomas, quick note to say thank you for these videos. I have only been using EToro for a little over a week. Your videos have been hugely helpful as I find my way around the system and begin to understand the process. Having a nightmare with Ripple, but happy to sit on it for as long as it takes. All my other trades so far have faired much better- but not enough to offset my losses on Ripple to date. Hopefully it won’t be an expensive learning curve. My aim is not to lose 90% of my money in 90 days!

    Keep up the good work.

  7. Hey Thomas.. long shot but see if can figure out what a 'Fund' is. I'm in the Crypto one on etoro but I have no idea how it works.
    Here my question ask on etoro which nobody is ever going to answer.

    Could someone explain the CryptoFund, or any fund, for a newbie.
    No graph goes up forever so is there someone managing the fund when things gets messy? Do profits get put back in and compounded like happens in a 'copy'.
    The paragraph on Etoro about funds is just waffle speak with no specifics.

    I'm in one but thinking now my 5k might be better managed in a 'copy fund'.

  8. I would like to thank you for all your great clips. I really like your style of explaining things, awesome job. wonder if you can also make more clips on buying altcoins on binance (optimizing fees & investments)

  9. Hi again, Tom………another interesting guy to watch is .."Doug Polk"…A 29 y/o Yank…He,s actually a well liked top professional poker player , with live winnings of $10M.app to date. Most notably last June ,17..when he won a $3.6M High Roller..You can Wiki him…He has a weekly Poker channel and also more recently a Crypto channel..(YouTube)..He,s very diff. from everyone else in so far as he always takes a more sideways/oblique view of whats going on, and loves to call out scammers etc. He,s very well respected and subscibed…..worth looking at…….>>>…here…..https://www.youtube.com/watch?v=XVfBnthj4BQ&feature=push-u-sub&attr_tag=5NqyYjI-TsFxJQkd-6

  10. Hi thanks for sharing your etoro experience. I am just dipping my toe in the virtual trades, I decided to invest in as many war mongering companies like raytheon, blackstone, lockhead Martin, surprise surprise doing well. Good luck with your dealings.

  11. Hi. Just a quick question. I following Jason Nemesis. I put 250 pound to follow. But now the actual money is 247. How is that possible if i copy him? Thanks for the answer. Dubuka

  12. dude!!! I was just about to ask you how selling works cause i was hella confused on how you will sell something you dont have! Your channel really has everything you need to know about etoro! I actually got most of the info i know from your channel! after a few weeks of lurking here i finally invested a few hundred dollars to start off! Thanks for everything thomas!

  13. Please consider the below before investing in eToro:
      The site bugs every few days. Today the charts are bugging AGAIN. 2nd last candle is moving but it should be frozen in time. P&L tends to slip a few pips in the wrong direction when this is happening.

    I lost around $1000 because i was unable to close trades due to another bug that happens when the markets are very volatile. Many people have complained of this and it often happens around the same time you get the "sign in/out bug".

     You will get signed out for no reason and won't be able to stay signed in for some time. Meanwhile you can not close or open positions!

    I had trades vanish just as they were going to do really well. Not in history just gone and money go's back into available balance. Big waste of your time!

    I have had open positions change into a completely different asset. I opened a bitcoin position and it transformed into an XRP position. This happened several times.

    I have seen P&L slipping in the wrong direction.

    The best people to copy are charlatans and designed to loose you money.

    The customer service are no use at all, they virtually never reply and especially not when you have lost money due to the site bugging.

    The online customer help chat window does not work since i have joined the site. Why is the feature even on there if it doesn't work!

    I had prank drop calls from Tunisia after leaving eToro my number.

    The spread is sometimes huge and it's variable, it might look ok when you open a position but then it randomly changes during your investment.

    If you are a member then some good advice. Right now is a good time to buy cryptos as they just crashed.

    Look to buy into EUR-USD and GBP to USD and hold (HODL) for a week or two.

    Gold is appealing just now. Buy in. 

    Don't take my advice for granted the market is full of surprises.

    If eToro spent more time and money on their site and customers it could be a great platform however they spend all of their money on advertising and investments in the market. No money is spent on repairing the site or improving customer service.

    This is what will happen since 90% of new traders loose 90% of their money in 3 months.

    You will make some money, happy times. You will loose some money. The site will bug and you will loose lots of money and start to write to customer service.

      Customer service will not reply. You will panic and start to chase your debts by increasing leverage and chasing the market around. You will loose more money.

    Customer service will not reply and unless you stop gambling and chasing the markets around you will loose even more money. Customer service will still not help you resolve the problems relating to the bugs.

      You will write your experience in the comments section on eToro. Your comments might be deleted as they spend more time editing comments than working on customer service.

    This guy is obviously paid a fortune by them to do these videos.

    Etoro have flooded youtube with videos, hundreds of them. You will find it difficult to find an honest opinion on their site.

      If they would respect their customers and help them out i would love this site. 
    They are treating you as if you were in a cattle market, once your dead they just want to ship more people in, & forget about the losers!
     
      Such a shame that they can't operate in a honourable fashion.

  14. Hi Thomas…Can you clarify this please…In a trade position, if I sell (which means I buy at current price and betting it will de-value) and it does de-value to my loss value as per stop loss tab (which I set earlier)….What will be my final gain in payout…..or should I say how much will I be paid out in profit…..Ok say I buy gold at a dollar (on the sell option)……set my stop loss to 50c and it hits the 50c…..What will be the final payout if I close this position….thanks Ken

  15. It's an interesting way of trading. However, I am in the U.S. and I've read multiple reviews of people not receiving their withdrawal amounts.. how often does this happen for you?

  16. You are a great teacher. I am only still very young and i'm pretty new to trading, I have learnt so much in this video and i would appreciate you making more!

  17. Thomas,your video are really a big help to understand to some of the difficult things to do trade on Etoro.thanks you so much for making such videos

  18. Great video man. Funny apple analogy. The process of selling on the stock market has never been explained in a simpler way.

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