Glossary

Short Selling

What is short selling?

Short selling, or going short, means betting against a share. You short a share by paying a small fee to borrow a number of shares in a company, selling them, and hoping the price falls before the loan expires and the shares have to be returned. At the lower price the investor buys the shares back for less than they sold them for, and keeps the difference. Say you pay 1 to borrow a share and sell it for 20. The price falls and you buy the borrowed share back for 10. That is a 10 difference, minus the 1 you paid to borrow it — a return of 9.

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