What is a short?

A short is when a trader borrows an asset at the current market price with the hope that prices will fall. If prices drop, they then buy the asset back at a lower price, with the differences in price being their earned profits on the trade. If prices rise they must pay more for the asset than they borrowed it for, resulting in a losing trade.

Short orders are placed by traders who are feeling bearish about the direction of the market. Traders will use their trading strategy to determine how low prices will fall before they decide to realise their gains or cut their losses.

Shorts are the opposite of longs where traders buy assets in the hope that prices will rise so they can sell for a profit later.

Did you find this useful?