Investors that buy a stock, acquire the shares in hope that they are able to sell the stock at a higher price sometime in the future and lock in gains.
Short selling is the opposite of buying a stock. An investor sells the share today in hope that they can buy it back in the future at a cheaper price and therefore make a profit.
Two key differences between buying and selling a stock are
To sell a share short, you need to be able to borrow the stock
When you short sell a stock your downside (potential loss) is unlimited, while your upside/profit is capped to the amount that the current share price goes to zero. When you buy a stock, the opposite is true. Your upside is unlimited while your downside is capped to the amount you originally invested
Below is a table holding the 5 of the most shorted stocks on the ASX.
Given that short sales signify that some investors think the price of the stock will decline in the future, it suggests that there are some underlying economic reas...
Stock Markets, Simplified.