Short selling is a trading or investing technique that bets on the price of a stock or other security

falling. This is a sophisticated method that should only be used by seasoned traders and investors

(Hayes, 2021). The definition of short selling is a trading or investment technique that bets on the

price of a stock or security falling. This is a more complex method that frequently aids seasoned

investors and traders. While traders can use this approach as a kind of speculation, portfolio

managers and investors can use it as a hedge against negative risks in the same security or any

other comparable security.

Short selling allows you to possibly earn a significant profit without having to invest a huge sum

of money up front. All you must do now is pay your broker the charge. If you're correct and the

stock price falls, the remainder is profit. Second, in a down market, shorting a company is one of

the few methods to profit. Third, if you already hold the stock, didn't sell it before the slump, and

believe it would only lose value, shorting can help you protect your investment. You may short it

and benefit from the remainder of the decline. Short selling earns money only if the stock price

falls. You'll lose the difference if you're wrong and the price rises. The true danger is that your

loss may be unlimited. If the price rises dramatically, you must purchase it at that level in order

to return the stock to your broker. Your losses have no bounds (Amadeo, 2021).

The example of securities I would like to invest in

1. Capital stock

2. Certificate of Deposit

3. Collateralized securities
References

Amadeo, K. (2021). Short Selling Stocks, Who Uses It, Pros, and Cons. Retrieved from:

https://www.thebalance.com/short-selling-stocks-pros-and-cons-3305894

Hayes, A. (2021). Short Selling. Retrieved from:

https://www.investopedia.com/terms/s/shortselling.asp