In the topsy-turvy world of the stock market, the idea of investing in reverse might sound fitting, or it might sound crazy. Short selling is a risky, but potentially lucrative investing transaction that’s a backward version of buying and holding stocks.
When selling short, you borrow an asset from a broker and immediately sell it. Your goal is to see the price drop and then return the shares and pay the broker back at a lower price. Short selling is fundamentally different from “going long” a security in every possible way. Here’s how: