Short selling

Short selling

Short selling is an investment strategy in which an investor borrows a security, sells it in the open market and later buys it back at a lesser cost, thus earning profits. This strategy is used when the price of a security drops. It has a high risk to reward ratio. However it can result in escalated losses if the price were to increase instead of decrease. This happened during the recent GameStop issue in the USA.

Originally written on February 22, 2021 and last modified on February 20, 2022.

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