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What is short selling?
What is short selling?
Mohamad Daou avatar
Written by Mohamad Daou
Updated over a week ago

Short selling is the selling of a stock without owning it. That may sound confusing, but it's actually a simple concept that allows you to make profits from declining prices.

Here's the idea: when you short sell a stock, your broker will lend it to you. The shares are sold and the proceeds are credited to your account. Your cash amount will increase with the value of the sale. This money is not yours as sooner or later you must close the short position returning them to your broker. A short position is closed by buying back the same number of shares.

If the price drops, you can buy back the stock at the lower price and make a profit on the difference. If the price of the stock rises, you have to buy it back at the higher price, and you lose money.

When you enter a short position, you will have a negative balance in the stock wallet.

In order to be eligible to short sell, your portfolio value should be more than $2,000.

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