What is short selling?

Short selling is the sale of capital markets products that the seller does not own at the time of the sale. It involves borrowing an asset's security and selling it on the open market. Short sellers believe the security price will fall or seek to hedge against potential price volatility in securities they own. If the price of the security drops, short sellers will then purchase the security at a lower price and make a profit. However, short-sellers will incur a loss if the security price rises.

Short selling is used for many purposes, including making a profit from an expected downward price movement, providing liquidity in response to unanticipated buyer demand, or hedging the risk of a long position in the same or related security.