Short selling
Betting that a price will fall: you borrow shares, sell them now and buy them back later, hopefully cheaper.
In plain English
You borrow shares from your broker and sell them. Later you buy the same number back and return them. If the price fell in between, you keep the difference. If it rose, you pay the difference.
Uncle Gary explains
Kevin borrows Uncle Gary's lawnmower, sells it for $200 and plans to buy an identical one for $150 next month to give back. If lawnmower prices go up instead, Kevin has a problem and Gary has questions.
Why it matters for your money
A short can lose more than you put in, and because markets mostly rise, shorting means swimming against the current. In our golden cross test, shorting on the death cross lost money.
Where we tested it
- Does the Golden Cross Work? We Tested 72 Strategies
- Does Volume Confirm the Trend? Sometimes It Contradicts It
- Should You Buy Stocks After Good Earnings? Post-Earnings Drift, Tested
Related terms
All glossary terms. Educational content, not financial advice.