By Stephen L. Thomas | November 3, 2023 | In
When an investor buys a stock, the hope is often that it will appreciate in value immediately or over time. That is one way to make profit on stock, but there is also another method called short selling. Shorting a stock can be a riskier strategy, but it can also yield relatively high returns when executed successfully. With high returns often comes high risk, so investors should understand the ins and outs before diving in. What Is Short Selling? When there are downturns in the market, it can create an opportunity for marketers to short sell. This is when an investor borrows shares or securities and then sells them with the intent of repurchasing the stock at a lower price. The key to success in short selling is being able to predict when a security will fall in value and selling once it does. You then repay the loan and keep whatever profit you have left. For instance, you may see a stock selling for $30 per share on the market and have an inclination that it’ll eventually fall in price. As a result, you