Short Position (Shorting)

Short Position, also known as “shorting” or “going short,” is an investment strategy that enables traders to capitalize on a decrease in the price of an asset, such as a stock. In this approach, the investor borrows shares of the asset from a broker and immediately sells them in the market. Should the asset’s price decline as expected, the short seller has the opportunity to repurchase the shares at a reduced price, return them to the broker, and secure the resulting variance as profit. Nevertheless, if the asset’s price unexpectedly rises, the short seller assumes the risk of potential financial losses since they are obliged to repurchase the shares at a price higher than the original sale price.