What Is Short Selling?
Short selling (also known as “selling short”) is an investment strategy used when an investor expects the price of a stock or other asset to decline. The investor sells first at a higher price and later buys it back at a lower price, aiming to profit from the price difference.
- Basic Principle of Short Selling
Core logic: Sell high → Buy low → Profit from the price difference
Unlike the conventional “buy low, sell high” approach of taking a long position, short selling involves selling first and buying later. The asset being sold is not owned by the investor but borrowed from the broker. In other words, the investor borrows shares from the broker, sells them at a higher price, and then buys them back at a lower price to return them to the broker.
