No. Bangladesh Stock Market doesn’t allow short selling. Short selling can be defined like this: When an investor borrows shares from others and sells them on the open market, guessing that he will buy them back later for less money.
In many countries, short selling is allowed for traders. Skillful day traders who have enough day trading strategies can gain from short selling. Newbies have to lose money in short selling. Since in short selling, traders sell others’ share by borrowing at high price and buy back them at lower price.
It has a drawback. You may not buy shares back at lower price in many cases. Therefore, short selling has high risk. Perhaps Bangladesh Stock Market doesn’t allow short selling because Bangladesh Security and Exchange Commission wants to control the market properly.
Advantages of Short Selling
1. Short selling has high probability of profit.
2. At the beginning, it requires small trading capital.
3. Enough chance to become rich faster.
4. A successful ways to earn money from other securities.
5. Prudent traders can chance fortune.
Disadvantages of Short Selling
1. In reality it has high chance of unlimited losses.
2. It requires margin account. Using margin is costing because of high interest rate.
3. For short selling, traders need more skill, experience and intelligent.
4. High chance to make mistakes.
5. Probability to market out.
My View
At present, Bangladesh Stock Market is not suitable for short selling. In order to introduce short selling in Bangladesh, authority should develop infrastructure at the outset. Then, Bangladesh Security and Exchange Commission should arrange programs to educate traders and investors.
In Short
Short selling has both advantages and disadvantages. Most developed countries allow short selling because their rules and regulations are strong. Moreover, traders in developed countries are more prudent than developing countries. Authorities of Bangladesh Share Market like to control the market. Therefore, they are reluctant to allow short selling.
Founder of The Financial Ask
