What is short selling?

What is short selling? are there any advantage or disadvantage doing that?


The sale of security that is not owned by the seller, who hopes to buy them back later at a lower price.

Selling a scrip first and then buying it back at a later point in time is called ‘short selling ’ or simply, ‘shorting’

Market is driven by both buyers & sellers sentiments viz: ‘Greed’ and ‘Fear’. ‘Fear’, a negative emotion which sets in quicker in trader’s mind than ‘Greed’. Because of this reason, it takes lesser time for the price to come down, if there is ‘Fear’ in the market whereas it takes comparatively more time for price of a security to go up.

So, in my view, short selling has an advantage, which is you can reach the desired profit booking levels pretty quickly than going LONG.

History suggests that prices plunge like anything if there is strong negative news. Ex: Scenarios like war/ scam/ instability in governance/ bomb explosion/ natural disaster.

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