JoymistaWhat Is Short Selling?
Short selling is selling a borrowed share in the hope of buying it back cheaper later and returning it, keeping the difference if the price falls.
Explained
When you short, the loss is in theory unlimited, since a price can rise without a ceiling. There are borrowing costs too, and you may be asked to close the position. In forex and CFDs, selling first is available directly with no share borrowing.
Example
Example with made-up numbersYou short 100 borrowed shares at 50 dollars and buy them back at 40, a profit of (50 − 40) × 100 = 1,000 dollars before costs.
Use it in Joymista
Related terms
- Long and ShortLong means a buy trade that profits if price rises; short means a sell trade that profits…
- MarginMargin is the amount your broker sets aside from your balance as collateral for an open…
- Insider Trades and Form 4Form 4 is an official US SEC filing in which a company’s executives and major holders…
Put it to work in Joymista
Signing up is free, some tools are free, and one subscription unlocks the rest.
Open in JoymistaEducational content, not investment advice.