Short Selling

Short selling involves selling an asset that the trader does not own, with the expectation that its price will fall. 

Explanation

Traders borrow the asset to sell it, planning to buy it back at a lower price and pocket the difference. 

Practical Example of Short Selling

An investor believes a stock's price will decline and sells it short. When the price drops, they buy it back at a lower price and profit from the difference.

‍