Short Selling Stocks | Bear Market Trading Strategy

Short Selling Stock Trading Strategy

Short selling is an investment or trading strategy that speculates on the decline in a stock or other security's price. It is an advanced strategy that should only be undertaken by experienced traders and investors.

In short selling, a position is opened by borrowing shares of a stock or other asset that the investor believes will decrease in value by a set future date—the expiration date.

The investor then sells these borrowed shares to buyers willing to pay the market price.

Before the borrowed shares must be returned, the trader is betting that the price will continue to decline and they can purchase them at a lower cost.

The risk of loss on a short sale is theoretically unlimited since the price of any asset can climb to infinity.