Short selling is like buying and selling a stock, but in reverse. You sell a stock you do not own hoping to buy it back at a lower price later, and the difference is your profit. While investors go long in expectation that the stock will appreciate in price, traders go short in anticipation that the stock price will decrease.
Selling short requires a margin account with an account value of at least $2000.
Lets assume you short 100 shares of hypothetical stock ABC at $10 per share; after a period of time, the stock has declined to $5, at which point you buy it back. Your net profit on this short sale is thus $500 ([$10 $5] x 100 shares).
To Sell Short: