What is short selling?

December 2, 2022

Short selling, also known as shorting or going short, is a trading strategy that involves selling an asset that the trader does not own in the hopes of buying it back at a lower price in the future. Short selling is typically used when a trader believes that the price of an asset will decrease, and they can profit by selling it at a high price and then buying it back at a lower price. This is the opposite of the more common practice of buying an asset in the hopes of selling it at a higher price in the future. Short selling can be a risky strategy because there is theoretically no limit to the potential losses if the price of the asset increases instead of decreasing.

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