Short sale

Short sale is a trading action where traders profit from a falling stock price. A short sale in stocks is performed by borrowing a stock from a broker and immediately selling it. When the price goes down, the trader buys the stock at a much lower price and returning the total number of shares back to the broker. The profit made from the short sale is the difference between the price when stock was borrowed and sold with the price it was bought for afterwards. A loss is incurred if the stock price goes up in value forcing the short trader to buy or cover the sold stock at a now much higher price.

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