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Short selling

Short selling involves selling stocks that the trader doesn’t own.

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Short selling involves selling stocks that the trader doesn’t own. It can be done on an intraday basis in equities or on a positional basis using derivatives such as futures or options. A trader 'goes short’ or simply sells a stock at current price, if he believes that a stock price could fall in the future. Once the price falls, the short position is squared off or the stock is purchased to pocket the profit. This is a speculative strategy and could result in a loss if, instead of falling, the stock price rises.

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