How an Investor Can Make Money Short Selling Stocks
What Is Short Selling?
Short selling is a strategy that makes money when a stock falls in price. It is also called “going short” or “shorting.” This is an advanced strategy that only experienced traders should try. An investor borrows a stock, sells it, and then buys the stock back to return it to the lender.
Short sellers hope that the stock they’re shorting will drop, so they can buy it back at a lower price and return it to the lender. The profit is the difference in price between when the investor borrowed the stock and when they returned it.
Key Takeaways
- Short sellers are wagering that a stock will drop in price.
- Short selling is riskier than going long because there’s no limit to the amount you could…
