Short selling is an investment strategy which has been very popular for quite some time now. The strategy consists of speculating on a stock moving down in price and profiting off the downward move.
Short Selling is when a trader borrows and sells a security and sells in on the open market, with the hopes of buying it back cheaper at a later time.
Short selling is hoping that a stock moves down in price in order to profit off the move.
IS SHORT SELLING DANGEROUS?
Short selling can be a profitable method in the stock market, but it can also be very risky. Since the investor is selling a stock and then hoping to buy it back at a later time, the danger can be if the stock starts to move up in price quickly causing a short squeeze.
Pros and Cons of Short Selling
Short selling is defined on Wikipedia as: “In finance, being short in an asset means investing in such a way that the investor will profit if the value of the asset falls. This is the opposite of a more conventional “long” position, where the investor will profit if the value of the asset rises. There are a number of ways of achieving a short position.“