What Does Selling Short Mean?

Answer:
Selling short is an investing technique

where investors sell shares they don’t own. Investors do this in order to take advantage of an anticipated drop in the price of a particular security so they can buy the shares at the lower price – and make a profit.

To perform a short sell, an investor has to borrow securities from his broker and sell them at the current price. The investor then buys back the same number of shares when the price goes down to cover the borrowed shares which he will have to return to his broker.

However, because stock prices can continue to rise forever, short selling is considered too risky by some investors. The regulation of short selling is handled by the Federal Reserve Board.