Long-short strategy to handle volatile markets

A long-short strategy is an investment approach that aims to generate returns in both rising and falling markets. This approach combines long and short positions to offset potential losses, effectively managing market risk.

1.A long-short strategy is an investment approach with the aim to profit in both rising and falling markets.
2.One part of this strategy is buying an asset, such as a stock, with the expectation that its price will rise over time.
3.The other part of the strategy is selling an asset which is not owned but borrowed from the broker, with the expectation to buy it back later at a lower price to return it to the lender, profiting from the difference.
4.Gains from long positions can offset losses from short positions, and vice versa, providing a buffer against broad market downturns reducing market risk.
5.Long-short strategies are more complex than traditional investing and are often used by sophisticated investors and hedge funds.

Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.


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