Can you profit when a company fails? Understanding the mechanics of short selling.

Short selling allows investors to bet against a stock, potentially profiting if its price declines. This video breaks down the specific process behind shorting and examines the inherent risks involved in this financial strategy.

Short selling is a method used by investors to speculate on the decline of a stock's value. Unlike traditional investing where one buys low to sell high, short selling involves borrowing shares to sell them, with the goal of buying them back later at a lower price to return to the lender.

The process carries distinct risks that differ from standard long positions. Because the potential for a stock price to rise is theoretically unlimited, the losses for a short seller can also be significant. This video provides an educational overview of these mechanics without offering specific investment advice.

Source: How Short Selling Works