Learn / Glossary / Short selling
GlossaryWhat is Short selling?
Short selling is betting that a stock's price will go down.
The simple explanation
A short seller borrows shares, sells them and hopes to buy them back later at a lower price. If the price rises instead, losses can be large, so it is considered high risk.
An example
A trader sells borrowed shares at 100 dollars, the price falls to 80 dollars and the trader buys back to profit 20 dollars per share.
Why it matters
Short interest is sometimes quoted in the news and can cause sharp jumps when shorts rush to buy back.
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Educational information, not financial advice.