How to Use the Short Selling Loss Limit Calculator
Short selling involves borrowing shares, selling them, and hoping to buy them back at a lower price. If prices rise, losses accumulate โ theoretically without limit. Enter your entry price, current price, shares, margin deposit, and maintenance margin to calculate current P&L and the forced liquidation threshold.
Forced Liquidation Price = Entry + (Margin โ Margin ร Maintenance%) รท Shares. When price reaches this level, the broker may close the position involuntarily. Short selling is high risk โ strict margin management and stop-loss discipline are essential.
Frequently Asked Questions
Borrowing shares to sell them, hoping to repurchase at a lower price for profit. If price rises, you incur a loss โ theoretically unlimited since there's no ceiling on how high a stock can go.
Liquidation Price = Entry + (Margin โ Margin ร Maintenance%) รท Shares. If price exceeds this, the broker may force-close your position.
Theoretically unlimited. In practice, the broker liquidates when margin runs out โ but you can lose your entire margin deposit.