Short selling is a trading method used when a trader believes a stock or asset's price will fall. Instead of buying low and selling high, short selling works in reverse: sell high first, then buy back lower later.

Here's how it works: A trader borrows shares of a stock from a broker and sells them at the current market price. If the price drops, the trader can repurchase the same shares at the lower price and return them to the broker, keeping the difference as profit.

For example, if shares are borrowed and sold at 100, and later bought back at 80, the trader gains 20 per share (excluding fees).

However, if the price rises instead of falling, the trader may have to buy back the stock at a higher price, resulting in a loss. Since there is no limit to how high a stock can go, losses from short selling can be unlimited.

Short selling is commonly used in volatile markets, during market corrections, or as a way to hedge against potential losses in other positions. It carries higher risk than traditional trading and often requires margin accounts due to the borrowing involved.

Short selling is a trading approach where profit is made when a stock's price falls. It works by borrowing shares from a broker and selling them at the current market price. Later, if the price drops, the shares are bought back at a lower price and returned, keeping the difference.

Here’s a basic example: A trader borrows each and sells them. If the price falls the trader buys back at 40 and returns the shares, keeping the  difference as profit (before fees).

This method is used by traders who analyze that a stock is overvalued or about to face negative news. It's also used as a hedge against other positions to reduce risk.

The downside of short selling is the potential for large losses. If the stock price rises instead of falling, the trader must still repurchase the shares at the higher price. For instance, if the price rises to 80, the trader loses 20 per share.

Because of the risks and borrowing requirements, short selling is generally more advanced than traditional long positions. It often involves margin accounts and may have specific broker conditions to execute.