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.
“Remember, your goal is to trade well, not to trade often.” – Alexander Elder