Definition: Short selling is where you sell a stock you do not own in anticipation that the price is going to fall. Your broker will “borrow” the stock from another client. You sell the stock and put the money in your account. If you are correct, you buy back the stock at the lower price and pocket the profit. The original owner then gets the stock back. This all perfectly legal.
Selling Short
By Ken Little, About.com Guide
Explore Stocks
Must Reads
About.com Special Features
10 Things You Can Do Today to Improve Your Credit
Easy steps to take control of your credit card debt. More >
Holiday Central
What to eat, where to go, fun things to do and how to save money on the perfect gifts. More >
©2009 About.com, a part of The New York Times Company.
All rights reserved.