Stock Market Investors » Glossary of Stock Terms » What is Short Selling?

What is Short Selling?

Many investors use selling short as a legal way to increase their profits. When an investor expects that the price of particular stock is about to fall s/he asks his/her broker to borrow the stock from another investor and sells it. S/he gets the money from the executed sale. When the price actually falls, the investor purchases back the stock and gets the resulting profit. The owner that has lent the stock gets it back.

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