Shorting (or short selling) means selling an asset in the hopes of rebuying it later at a lower price. A trader who enters a short position expects the asset’s price to decrease, meaning that they are “bearish” on that asset. So instead of just holding and waiting, some traders adopt the short selling strategy as a way to profit off an asset’s price decline. This is why short selling can also be a good way to preserve capital during price declines.

Shorting is very common in essentially any financial market, including the stock market, commodities, Forex, and cryptocurrency. As such, short sales are widely used by retail investors and professional trading firms, such as hedge funds. Short selling stocks or cryptocurrencies is a common strategy for both short-term and long-term traders.

The opposite of a short position is a long position, where a trader buys an asset in the hopes of selling it later at a higher price.