Short selling is a trading strategy in which an investor borrows a security, typically from a brokerage firm, and sells it in the market with the hope of buying it back later at a lower price. The profit is made from the difference between the price at which the security was sold and the price at which it was bought back.
Short selling is typically used by investors who believe that the price of a security will decrease in the near future. Short selling is a high-risk strategy because if the price of the security increases instead of decreasing, the investor will incur losses. Additionally, there is no limit to how much money an investor can lose in a short sale since the price of the security can continue to rise indefinitely.
Short selling is a legal practice in many financial markets, but it can also be controversial. Some critics argue that short selling can be used to manipulate markets or drive down the value of a company’s stock. As a result, short selling may be subject to restrictions or regulations in some markets.