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Trading Glossary

Short

Basics

What it means

Betting that an asset will fall in price. You borrow the asset, sell it now, and aim to buy it back cheaper later to return it.

Example

You short 50 shares of TSLA at $250. If it drops to $230, you buy back for $11,500 instead of the $12,500 you received, pocketing $1,000.

Mistake beginners make

Beginners forget the loss on a short has no fixed ceiling -- if TSLA runs to $500 you owe far more than you started with. Shorting is not just "long in reverse."

Related terms

  • Long — Buying an asset so you profit if its price goes up. You own it and want to sell it later a…
  • Position — An open trade you currently hold. A long position means you own the asset; a short positio…

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