Hi I have a (perhaps newby) question about shorting.
I will use the commodity NATGAS as an example which is $2.69 (01-aug.-'23) and I use Etoro as platform.
However, the question is a general question for all platforms I suppose:
I see that if eg. today I open a short (CFD, 1x) of $1000,- I get a weekly fee of $10.49 indefinitely as long as my position does not hit stop loss.
I can move my stop loss to $14.8 if I add another $4000,- to my position.
So using $5000 in total, I get $10.49*52=$545 annually. This is more than 10%!!
Now, I get that if the price of NATGAS rises, I am in ''trouble'', but not as long as it stays under my SL. I could even put the fees I receive back into my position increasing the SL further over time whilst maintaining the $545 annual fee.
If I look at the history of NATGAS (known for more than 25 years) it never reached $15,-
I know that results from the past are no guarantees for the future but still it feels like a solid way to get $545 annually! Why isn't everyone doing this then... Is it just the fact that the NATGAS price might rise to new all time highs??! or is there something else I am missing?
Submitted August 02, 2023 at 03:32AM by Loud__N__Proud https://ift.tt/WzD7V2t