What is Short Position (Shorting)?

Short selling (also known as "going short" or "shorting") is the practice of seeking to profit from the decrease in an asset's price (for example, short selling a stock). A short seller sells shares borrowed from a broker. If the price of the share goes down, they can be purchased at a discount and returned to the broker. The short seller can then pocket the difference between the purchase price and the price the stock was initially shorted — or sold — at. However, if the price of a shorted stock rises, the short seller is responsible for the difference and may incur financial losses.