Simple definition of short selling is the sale of an asset that the seller has borrowed in order to profit later from fall in the price of the asset. In other words trader sells securities at one price and buys it back at a lower price making gain in the price difference. in this article we are referring to stock although you ca short any instrument or asset, bonds, commodities, currencies, etc. There is usually certain amount of speculation that causes traders to short sell or the need to protect oneself against loss on investment by balancing transaction. Basically there are two basic types of investors, buy-and-hold investors and day traders. The first hold their portfolio stocks for the long term expecting to see significant rise in price over time which will result in gains. Other category of investors trade on the short term basis. Unlike investors that go long and wait for stock price to build up traders buy stock that will possibly fall in price....
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