What is short selling?

Short selling is a trading strategy where an investor borrows shares of a stock and sells them on the open market, expecting the price to decline. Later, the investor buys back the same number of shares at the lower price and returns them to the lender, keeping the difference as profit. It is often used by traders to capitalize on falling markets or overpriced stocks. However, short selling carries significant risk, as potential losses are theoretically unlimited if the stock price rises instead of falling. It also involves margin requirements and interest on the borrowed shares. Regulators often monitor short selling to prevent market manipulation, especially during volatile periods. It requires in-depth research and timing, as misjudging market trends can result in substantial financial losses.