Have you ever experienced losses in the stock market but seen news reports of people making huge profits during a market crash? This is not a myth but a trading strategy called "short selling" or "shorting stocks." Unlike traditional buying with the expectation that prices will rise, short selling involves taking a reverse position during a market decline, allowing investors to profit even in a bear market. This guide will help you understand how short selling works, the participation requirements, target selection, and practical operation tips.
Core Principle of Short Selling: How Reverse Profits Work
Short selling, also known as shorting, going short, or shorting stocks, has a straightforward core logic: predicting that a stock will decline in the future, so you sell it at a higher price first, then buy it back at a lower price after the decline, earning the difference. This is completely opposite to the traditional "buy first, sell later" approach and is considered a "sell first, buy later" reverse operation.
Investors engaging in short selling face a practical problem: you do not own the stock, yet