Sell (매도)
Overview
Sell (매도, Sell) refers to the act of an investor selling held assets (stocks, bonds, real estate, foreign exchange, etc.) in financial markets to convert them into cash or equivalent value. Selling, together with buying (매수), forms the two pillars of market transactions and is executed for various purposes such as realizing profits, limiting losses, rebalancing portfolios, and securing liquidity. Selling is generally divided into spot selling (selling held assets) and short selling (borrowing and selling assets not held), with the latter involving greater regulation and risk.
Main Content
1. Types of Selling
- Spot Selling: The most basic form where an investor sells assets they actually hold in the market. Example: A stockholder sells specific stocks.
- Short Selling: A strategy of borrowing and selling assets not held, then buying them back later at a lower price to profit. High-risk, high-return, generating profits in a declining market.
- Forced Selling (Margin Call): When the collateral value falls below a certain level in margin or credit trading, the securities company forcibly sells the assets.
- Conditional Selling: Selling automatically executed under specific conditions, such as limit orders, market orders, and stop-loss orders.
2. Factors in Selling Decisions
- Profit Realization: Selling when the asset price rises to reach the target profit.
- Loss Limitation: Selling to prevent further losses when the price falls (stop-loss).
- Portfolio Rebalancing: Selling some assets to adjust asset allocation ratios.
- Liquidity Needs: Selling assets to secure emergency funds.
- Fundamental Deterioration: Selling when fundamental value declines, such as worsening corporate performance or industry crisis.
- Technical Signals: Selling when sell signals appear in chart analysis (e.g., moving average downward crossover, RSI overbought).
3. Selling Strategies
- Scalping: Selling after ultra-short-term holding to profit from tiny price differences.
- Day Trading: Completing buying and selling within a single day.
- Swing Trading: Holding for several days to weeks before selling.
- Position Trading: Holding long-term and selling based on macroeconomic changes.
- Short Selling Strategy: Borrowing and selling to profit in a bear market.
4. Regulations Related to Selling
- Short Selling Regulations: Many countries allow short selling with restrictions. Example: South Korea banned short selling from March 2020 to May 2021, then partially resumed. A full resumption was planned for June 2024 but postponed.
- Short Selling Reporting: Obligation to report large-scale short sales to regulatory authorities.
- Insider Trading Prohibition: Selling using undisclosed material information is illegal.
- Taxes: Capital gains tax (for stocks above a certain amount) is imposed on selling profits.
5. Selling and Market Impact
- Selling Pressure: Large-scale selling causes price declines and dampens market sentiment.
- Liquidity Supply: Selling supplies liquidity to the market, facilitating trading.
- Price Discovery: Sell orders are a key factor in determining market prices.
- Panic Selling: Collective selling driven by fear leads to sharp declines (e.g., the 2020 COVID-19 crash).
Recent Trends
Key trends in the selling market as of 2024–2025 are as follows.
- Changes in Short Selling Regulations: South Korea announced a full resumption of short selling in June 2024 but postponed it to protect retail investors and supplement systems. Possible resumption in the first half of 2025. The U.S. SEC strengthened short selling reporting rules in 2024.
- AI-Based Selling Algorithms: Artificial intelligence analyzes market data to predict optimal selling points. As of 2025, over 70% of major hedge funds use AI selling strategies.
- ESG Selling: 'ESG divesting'—selling stocks of companies that do not meet environmental, social, and governance (ESG) criteria—is increasing. Global ESG funds' selling volume exceeded $1 trillion in 2024.
- Cryptocurrency Selling: Institutional investors' cryptocurrency selling increased after the approval of Bitcoin spot ETFs (2024). Daily trading volume reached $50 billion as of January 2025.
- Panic Selling Prevention Mechanisms: Expanded adoption of circuit breakers (trading halts on certain declines) and sidecars (temporary suspension of program selling). South Korea activated a circuit breaker when the KOSPI fell 8% in August 2024.
- Tax Changes: South Korea planned to implement a financial investment income tax (금투세) from 2025 but decided to abolish it. Instead, the capital gains tax threshold was raised (from 50 million won to 100 million won in 2025).
Related Topics
- [[Buy (매수)]]
- [[Short Selling (공매도)]]
- [[Stock Market (주식 시장)]]
- [[Investment Strategy (투자 전략)]]
- [[Stop-Loss (손절매)]]
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