Short selling, also known as shorting stocks or going short, is an advanced trading strategy that involves selling borrowed shares of a company’s stock with the expectation that the stock price will decline, allowing the investor to buy back the shares at a lower price and return them to the lender, pocketing the difference as profit.
Short selling can be a lucrative strategy, but it also carries a higher level of risk than traditional long investing. This is because the potential losses in a short sale are theoretically unlimited, as the stock price could rise indefinitely. As a result, short selling is generally only recommended for experienced investors who have a thorough understanding of the risks involved.
